Legislation to raise the debt ceiling and cut the deficit, signed by the president Aug. 2, leaves physicians in limbo regarding their Medicare payments next year and in the future.
The biggest question is whether the 29.5% cut to Medicare physician fees scheduled for Jan. 1, 2012, will go into effect. This massive payment cut is called for under the Sustainable Growth Rate (SGR) formula, the formula used to set Medicare payments to physicians.
Physicians’ groups, led by the American Medical Association lobbied Congress to include a permanent fix to the SGR in the deficit reduction package. They argued that while fixing the SGR carries a $300 billion price tag, getting the job done now would save the government money down the road. Instead, lawmakers left the SGR out of the package completely.
The new law of the land, the Budget Control Act of 2011 puts into place about $1 trillion in spending cuts over the next decade from the discretionary side of the federal budget. While these immediate cuts do not directly affect physicians, they do impact graduate medical education: Medical students who take out subsidized graduate student loans on or after July 1, 2012, will have to start paying the interest on those loans earlier.
The next round of budget cuts will be determined by the Joint Select Committee on Deficit Reduction, also known as the super committee. The 12-member panel is composed of legislators from both parties and both houses of Congress.
Before the joint committee can forward its recommendations to the full Congress, those recommendations must be approved by a majority vote.
“There’s a lot of concern that the committee will be deadlocked,” said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.
The law requires the joint committee to draft legislation cutting another $1.2 trillion to $1.5 trillion in federal spending over 10 years. The committee has broad authority to consider spending cuts, taxes, and other changes across both discretionary and mandatory government programs. Funding for Affordable Care Act programs is also on the table.
The joint committee must vote on recommendations by Nov. 23, and lawmakers must vote on the joint committee’s bill by Dec. 23.
To keep the legislation from getting bogged down in the Senate, the Budget Control Act requires that the joint committee’s bill be given a fast-track, up-or-down vote requiring a simple majority to pass each chamber.
Should the joint committee’s bill fail, or if the committee deadlocks, the Budget Control Act calls for automatic cuts across the federal government totaling $1.2 trillion over 10 years.
Those cuts would include up to a 2% reduction in Medicare physician payments beginning in 2013. Under a worst-case scenario, physicians could face not only the 29.5% SGR cut in January 2012, but another 2% annual fee cut starting the following year.
“I don’t know anyone who can continue very well with a 30% reduction in payment for a significant segment of their business,” said Dr. Roland Goertz, president of the American Academy of Family Physicians. “It just makes it very, very tough.”
Surveys of AAFP members show that about a quarter of all patients seen by family physicians are Medicare beneficiaries. But in some practices, such as those in rural areas or underserved urban areas, that number can be as high as 50%. In those cases, it becomes a major challenge to figure out a viable business plan that can absorb 30% cuts to half of the business, Dr. Goertz said.