Health Affairs

Medicare Payments to Physicians

Bethesda, MD --On January 1, 2012, a 27.4 percent cut in Medicare payment rates to physicians will take effect unless Congress does something to stop it. As the deadline approaches, Congress, the administration and other government entities are deciding whether to pass another short-term "doc fix," or find a longer-term solution, weighing the impact any plan will have on the federal deficit. This latest Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation examines the various proposals and their possible effects on federal spending and on health care providers.

The policy brief provides the following;

• A recent history of how payments to Medicare providers would have been affected by the sustainable growth rate (SGR) formula and past Congressional actions to keep it from cutting physician payments.
  
  
• A discussion of proposals on the table to replace the formula. These include plans from the Medicare Payment Advisory Commission (MedPAC) and the National Commission on Fiscal Responsibility and Reform (the so-called Bowles-Simpson Commission). These would have Congress adopt other ways of setting Medicare physician payment rates, and in the case of the MedPAC proposal, would redistribute payment toward primary care physicians and away from specialists.
  
  
• A discussion of what may come next. Congress is awaiting recommendations from the Joint Select Committee on Deficit Reduction (the "Super Committee"). Depending on what happens, it is possible that Congress will pass another short-term fix before year's end to prevent rate cuts from taking effect in 2012. Under current budget rules, putting off the cut yet again would not require any immediate offsetting savings elsewhere in the budget. Nevertheless, the overall cost of postponing the repeal of the SGR formula becomes higher every year.

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears each month in print, with additional Web First papers published weekly at www.healthaffairs.org. You can also find the journal on Facebook and Twitter and download Narrative Matters on iTunes. Address inquiries to Sue Ducat at (301) 841-9962 or sducat@projecthope.org