U.S. deficit panel weighs Medicare doctor payments

Wed Oct 12, 2011 4:43pm EDT

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* Medicare payment fix would cost billions

* Without fix doctors face a 30 percent pay cut

* Congress avoided issue for years

By Donna Smith

WASHINGTON, Oct 12 (Reuters) - The congressional "super committee" charged with reducing U.S. budget deficits is considering tackling a measure that could make their job even harder by preventing a steep pay cut for Medicare doctors.

The bipartisan panel that has been tasked with finding at least $1.2 trillion in budget savings over 10 years has a "strong interest" in taking up the doctor payment issue, sources familiar with panel discussions said on Wednesday.

But doing so would cost hundreds of billions of dollars and thus complicate deficit-reduction work.

The sources stressed that the panel has not yet decided whether to include a so-called "doc fix" in its package of deficit reduction recommendations, which is due by Nov. 23.

If Congress fails to act by the end of the year, doctors treating patients enrolled in the Medicare healthcare program for the elderly and disabled will be hit with a 30 percent pay cut in January. The pay cut is rooted in a 14-year-old deficit-reduction law aimed at reining in growing Medicare payments to doctors.

But a steep pay cut in January would make it extremely difficult for Medicare patients to find doctors willing to see them, healthcare advocates have warned.

FEAR OF RUNNING OUT OF OFFSETS

The problem for the super committee is that the 10-year cost of fixing the "sustainable growth rate" Medicare pay formula is about $300 billion and growing. The panel would have to make up that difference through additional spending cuts or tax increases beyond the $1.2 trillion goal.

The Medicare doc fix could help the panel sell its final package of recommendations to healthcare advocacy groups and a medical community who are worried about additional Medicare cuts on top of the $500 billion that were included in President Barack Obama's healthcare overhaul last year.

Dozens of doctors' groups, including the American Medical Association, have urged the super committee of 6 Democrats and 6 Republicans to repeal the current Medicare payment formula.

One healthcare industry lobbyist said if the super committee fails to tackle the Medicare payment issue, it will be all the more difficult to get Congress to act by the end of the year. In the current fiscal environment, every spending increase has to be offset by a spending cut or tax hike elsewhere in the budget.

"After this (super committee) process is over, there won't be anything to pay for the doc fix in terms of coming up with offsets," said one industry lobbyist.

For years Congress has put off permanently addressing the payment formula in order to make long-term deficit projections look rosier than they actually were. Instead, lawmakers resorted to a series of last minute temporary "fixes."

Doctors argue that the cost of delay is growing. "We estimate additional short-term interventions will double the cost to approximately $600 billion by 2016," according to a letter to the super committee signed by dozens of doctors' groups, including the American Medical Association.

It is not clear the panel will decide on a permanent change in the payment formula. One source suggested the panel could even consider something less than its 10-year budget window.

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