Senate is Considering a “Doc-Fix” as Part of Debt Limit Expansion

In December 2009, Congress included a 60-day patch to the Medicare physician payment cut in the FY 2010 defense appropriations legislation. This patch delayed the implementation of the scheduled 21.2 percent cut in Medicare physician payments until March 1, 2010.

During the week of January 17-23, 2010, the Chairman of the Senate Budget Committee, Kent Conrad (D-ND) confirmed that Senate leadership is working on a fix to the Medicare physician payment reduction. The fix would be added onto two “must-pass” bills: the debt limit expansion and the COBRA/unemployment extension legislation.

According to several sources, the repeal of the Sustainable Growth Rate (SGR) formula will be done in two steps. First, an amendment waiving the Medicare physician payment from the “pay-go” requirement would be offered to the debt limit expansion resolution (H.J. Res 45). This means that if approved, the cost of repealing the Medicare physician payment formula would not be required to be offset by new revenues for the next five years. Instead, this cost which is estimated to be $105 billion over five years, would be added to the debt.

If the amendment waiving the pay-go requirement is approved, details of the policy changes repealing the SGR formula would be included as an amendment to another piece of legislation: the COBRA/unemployment extension bill. The Senate Leadership is considering using language identical to the “Medicare Physician Payment Reform Act of 2009” (H.R. 3961), which was passed by the House of Representatives last November.

The amendment would provide an increase to physician reimbursement based on the Medicare Economic Index (approximately 1.2 percent) in 2010. Beginning in 2011, the flawed SGR formula would be replaced. The new system would group services into two categories and establish separate target growth rates, including:

• Evaluation and Management services and preventive services would increase based on the gross domestic product (GDP) +2 percentage points
• All other services will increase based on the GDP + 1 percentage point.

However, the future of this plan remains uncertain. The Senate has already rejected an unpaid Medicare physician fix with several Democrats voting against the bill over budget concerns. According to Senate rules, each individual amendment added to these two legislative vehicles must be approved by 60 votes. It is not clear if Senate leaders can count on the required votes for passage.