'Fiscal cliff' deal halts SGR cut for a year

A last-minute deal by lawmakers means that physicians won’t be subject to a nearly 29% cut to their Medicare payments this year.

The deal to the avoid the so-called "fiscal cliff" will delay for 2 months an automatic 2% cut to Medicare fees that was part of an earlier plan to cut the deficit, known as sequestration. The deal also averts a 26.5% Medicare pay cut that was scheduled to take effect Jan. 1 because of the Sustainable Growth Rate (SGR) formula. The SGR cut will be delayed for 1 year, but physicians will face an even larger cut in 2014 unless Congress takes some action to alter or to eliminate the formula.

The American Taxpayer Relief Act of 2012 (H.R. 8), which delays deep cuts in federal spending and tax increases on the middle class, was passed by the House and Senate on Jan. 1; the President *signed the bill Jan. 2.

Reaction from physicians has been lukewarm.

"This patch temporarily alleviates the problem, but Congress’ work is not complete; it has simply delayed this massive, unsustainable cut for 1 year," Dr. Jeremy Lazarus, president of the American Medical Association, said in a statement. "Over the next months, it must act to eliminate this ongoing problem once and for all."

The SGR fix will be funded mainly through cuts to hospital funding, including reduced payments to disproportionate share hospitals, adjustments to documentation and coding, and cuts to end-stage renal disease payments. The cuts also include radiation oncology care and hospital outpatient payments for radiosurgery involving multisourced cobalt-60.

The American Hospital Association objected to the cuts.

"While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals’ ability to care for seniors and their communities," Rich Umbdenstock, the AHA’s president and CEO, said in a statement. "That’s why we are very disappointed at the approach taken in this measure."

The SGR fix is not paid for by cuts to the Affordable Care Act, as had been proposed late in 2012. In December, a proposal was circulating on Capitol Hill to pay for a 1-year fix by eliminating increases in Medicaid payments for primary care services. The physician community, including both primary care and specialty societies, wrote letters to House and Senate leaders urging that the proposal be rejected because it would preserve access for seniors at the risk of access for poor patients.

Despite the deal, Congress has plenty to do in the coming weeks. H.R. 8 only delays the sequestration cuts for 2 months to allow time for another deficit-reduction deal. The sequester includes not only an automatic 2% Medicare provider cut, but also deeper cuts to funding for health professions grants, the National Health Service Corps, and public health programs.

[email protected]

*UPDATE 01/03/13: This story was updated to reflect that President Barack Obama signed the bill on Jan. 2, 2013.

A last-minute deal by lawmakers means that physicians won’t be subject to a nearly 29% cut to their Medicare payments this year.

The deal to the avoid the so-called "fiscal cliff" will delay for 2 months an automatic 2% cut to Medicare fees that was part of an earlier plan to cut the deficit, known as sequestration. The deal also averts a 26.5% Medicare pay cut that was scheduled to take effect Jan. 1 because of the Sustainable Growth Rate (SGR) formula. The SGR cut will be delayed for 1 year, but physicians will face an even larger cut in 2014 unless Congress takes some action to alter or to eliminate the formula.

The American Taxpayer Relief Act of 2012 (H.R. 8), which delays deep cuts in federal spending and tax increases on the middle class, was passed by the House and Senate on Jan. 1; the President *signed the bill Jan. 2.

Reaction from physicians has been lukewarm.

"This patch temporarily alleviates the problem, but Congress’ work is not complete; it has simply delayed this massive, unsustainable cut for 1 year," Dr. Jeremy Lazarus, president of the American Medical Association, said in a statement. "Over the next months, it must act to eliminate this ongoing problem once and for all."

The SGR fix will be funded mainly through cuts to hospital funding, including reduced payments to disproportionate share hospitals, adjustments to documentation and coding, and cuts to end-stage renal disease payments. The cuts also include radiation oncology care and hospital outpatient payments for radiosurgery involving multisourced cobalt-60.

The American Hospital Association objected to the cuts.

"While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals’ ability to care for seniors and their communities," Rich Umbdenstock, the AHA’s president and CEO, said in a statement. "That’s why we are very disappointed at the approach taken in this measure."

The SGR fix is not paid for by cuts to the Affordable Care Act, as had been proposed late in 2012. In December, a proposal was circulating on Capitol Hill to pay for a 1-year fix by eliminating increases in Medicaid payments for primary care services. The physician community, including both primary care and specialty societies, wrote letters to House and Senate leaders urging that the proposal be rejected because it would preserve access for seniors at the risk of access for poor patients.

Despite the deal, Congress has plenty to do in the coming weeks. H.R. 8 only delays the sequestration cuts for 2 months to allow time for another deficit-reduction deal. The sequester includes not only an automatic 2% Medicare provider cut, but also deeper cuts to funding for health professions grants, the National Health Service Corps, and public health programs.

[email protected]

*UPDATE 01/03/13: This story was updated to reflect that President Barack Obama signed the bill on Jan. 2, 2013.

A last-minute deal by lawmakers means that physicians won’t be subject to a nearly 29% cut to their Medicare payments this year.

The deal to the avoid the so-called "fiscal cliff" will delay for 2 months an automatic 2% cut to Medicare fees that was part of an earlier plan to cut the deficit, known as sequestration. The deal also averts a 26.5% Medicare pay cut that was scheduled to take effect Jan. 1 because of the Sustainable Growth Rate (SGR) formula. The SGR cut will be delayed for 1 year, but physicians will face an even larger cut in 2014 unless Congress takes some action to alter or to eliminate the formula.

The American Taxpayer Relief Act of 2012 (H.R. 8), which delays deep cuts in federal spending and tax increases on the middle class, was passed by the House and Senate on Jan. 1; the President *signed the bill Jan. 2.

Reaction from physicians has been lukewarm.

"This patch temporarily alleviates the problem, but Congress’ work is not complete; it has simply delayed this massive, unsustainable cut for 1 year," Dr. Jeremy Lazarus, president of the American Medical Association, said in a statement. "Over the next months, it must act to eliminate this ongoing problem once and for all."

The SGR fix will be funded mainly through cuts to hospital funding, including reduced payments to disproportionate share hospitals, adjustments to documentation and coding, and cuts to end-stage renal disease payments. The cuts also include radiation oncology care and hospital outpatient payments for radiosurgery involving multisourced cobalt-60.

The American Hospital Association objected to the cuts.

"While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals’ ability to care for seniors and their communities," Rich Umbdenstock, the AHA’s president and CEO, said in a statement. "That’s why we are very disappointed at the approach taken in this measure."

The SGR fix is not paid for by cuts to the Affordable Care Act, as had been proposed late in 2012. In December, a proposal was circulating on Capitol Hill to pay for a 1-year fix by eliminating increases in Medicaid payments for primary care services. The physician community, including both primary care and specialty societies, wrote letters to House and Senate leaders urging that the proposal be rejected because it would preserve access for seniors at the risk of access for poor patients.

Despite the deal, Congress has plenty to do in the coming weeks. H.R. 8 only delays the sequestration cuts for 2 months to allow time for another deficit-reduction deal. The sequester includes not only an automatic 2% Medicare provider cut, but also deeper cuts to funding for health professions grants, the National Health Service Corps, and public health programs.

[email protected]

*UPDATE 01/03/13: This story was updated to reflect that President Barack Obama signed the bill on Jan. 2, 2013.