Find-A-Code Focus Newsletter

Medicare Physician Fee Schedule Cuts Largely Averted

January 03, 2013

Last minute Congressional action on Tuesday night halted the scheduled Medicare fee cuts scheduled to begin on January 1, 2013. As part of the “fiscal cliff” bill (the American Taxpayer Relief Act [ATRA] of 2012), this law delays the SGR cuts for a year and pushes back another 2% cut for two months. Today, Wednesday, President Obama signed this bill into law.

Although pleased with the outcome, a statement by the American Medical Association indicated its reservations when they said, “This patch temporarily alleviates the problem, but Congress' work is not complete; it has simply delayed this massive, unsustainable cut for one year. Over the next months, it must act to eliminate this ongoing problem once and for all."

President Obama stated, "I believe we have got to find ways to reform that program [Medicare] without hurting seniors."

However, the costs of this $30 billion SGR patch will be paid for largely though reductions in payments to hospitals. It lowers "disproportionate share" payments to facilities that care largely for poor populations and lowers the baseline for payments for inpatient stays. It also re-based bundled payments for end stage renal disease patients and reduced risk-adjusted payments to Medicare Advantage plans.

In response, the American Hospital Association issued a statement on Tuesday stating, “While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals' ability to care for seniors and their communities. That's why we are very disappointed at the approach taken in this measure."

Medicaid providers will be glad to know that the ATRA did not cancel the Affordable Care Act (ACA)'s Medicaid pay hike for primary-care physicians as was discussed as a possible cost-cutting option at one point.

There are still unanswered questions such as how lawmakers can reduce the federal deficit to defuse sequestration which was triggered by Congress' failure to reach a deficit-reduction deal in 2011. As part of sequestration, there is a 2% Medicare cut which ATRA has postponed until March 1, 2013. Agreements must be reached by then or Medicare payments will be cut by 2%.


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