[MMA News Now, Feb. 16, 2012] Congressional conferees reached a deal to stop the 27 percent Medicare pay cut scheduled to take effect in March. They failed, however, to adopt a permanent fix to the flawed Sustainable Growth Rate (SGR) formula.  They opted instead for a short-term patch that freezes payments at the current levels through 2012.

The cost of this short-term patch is reportedly offset through reductions in a number of health care programs, including Medicaid disproportionate share payments to hospitals, Medicare bad debt payments to hospitals, federal Medicaid payments to Louisiana, and the prevention fund created by the Affordable Care Act. Other expiring Medicare policies were extended through the end of the year, including the “floor” on geographic adjustments to the physician work component of the Medicare fee schedule which provides a positive benefit to Minnesota physicians; the therapy cap exemption process; and ambulance add-on payments. Two policies – Section 508 hospital and special pathology payments – will be phased out, and mental health add-on payments and pay increases for bone density scans have been eliminated. 

Responding to the failed attempt for a permanent solution, AMA President Peter W. Carmel, M.D., said, “The House and Senate conference committee missed a serious opportunity to permanently replace the flawed Medicare physician payment formula and protect access to care for military families and seniors. Congress had the opportunity to permanently end this problem, which is the sound, fiscally prudent policy choice.”

Money from the Overseas Contingency Operations fund, which was budgeted to pay for U.S. wartime activities in Iraq, Afghanistan, and other countries and is now less likely to be used, could have been used for a permanent solution.

This is the second time in a week that plans for SGR fixes have been in the news. The first appeared in President Barack Obama's proposed 2013 budget on Tuesday, when he signaled a commitment to work with Congress to find a permanent solution to this ongoing problem.

Assuming this agreement has sufficient support, both the House and Senate could vote on it by the end of the week.