Senate may raise physicians’ Medicare payment fees

The Senate is poised to take action on a costly bill to hike Medicare payments to physicians just weeks before bringing a sweeping healthcare overhaul to the floor.

Majority Leader Harry Reid (D-Nev.) on Wednesday morning quietly set in motion legislation that could cost more than $200 billion over 10 years – without cuts or revenue to offset the spending -- on a separate track from a larger healthcare bill that President Barack Obama and Senate Democratic leaders have vowed would not add to the budget deficit.

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“This is a bill that would permanently change the payment system for physicians to a fairer system,” Sen. Debbie Stabenow (D-Mich.) said on the Senate floor as she introduced the bill Tuesday evening. “It does have a cost to it,” she acknowledged.

Next year, without congressional intervention, Medicare’s fees to physicians would drop by 21 percent. In addition to their desire to prevent those cuts, Democrats are eager to win the support of physicians for healthcare reform. The American Medical Association (AMA) has already endorsed the House healthcare reform bill, which contains a $245 billion payment fix.

But doing so would also open Democrats to charges they were skirting the budget rules they established for themselves and were underestimating the cost of healthcare reform by moving a related bill separately.

“As we go into the health care reform debate, I think it is important we get this done right first so every physician understands we are not going to put them in this position year after year after year,” Stabenow said.

With Reid’s procedural move Wednesday, the Senate is prepped to hold a cloture vote as soon as next week. That vote would require 60 senators to pass, as would a vote to override any senator’s objection to the bill’s cost not being offset under pay-as-you-go budget rules.

Obama and Democratic leaders in Congress has been adamant that “paygo” would reign when it comes to new spending or tax cuts. The healthcare reform bill, with a cost ranging from just over $800 billion to just over $1 trillion, would also be subject to that standard.

But lawmakers and the White House have sought a means to exempt the physician payments from paygo requirements. Congress has acted time and again to protect doctors from pay cuts and would inevitably to so again.

Because of that, many Democrats argue, the fact that the budgetary baseline assumes those cuts and characterizes as a fix as new spending does not reflect reality.

The White House and the House support enacting paygo into law – but leaving Medicare physician payments and a few other items out of its scope. The paygo bill would “rebase” the physician payment formula to assume that Medicare spending over the next 10 years would include the new policy and the hundreds of billions of dollars in additional spending.

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The congressional budget resolution contains provisions that originated in the House allowing Congress to pass a physician payment fix without paying for it.

The Senate Finance Committee would block the cuts for two years as part of its $829 billion, which the Congressional Budget Office says would reduce the deficit by $81 billion.

Reid, Senate Finance Committee Chairman Max Baucus (D-Mont.), Sen. Chris Dodd (D-Conn.) of the Health, Education, Labor and Pensions Committee and White House Office of Health Reform Director Nancy-Ann DeParle met with lobbyists from the AMA and other physician lobbying groups to explain their plan. The gathering took place immediately after the senators met with DeParle and other White House aides on healthcare reform.

Stabenow may have just introduced the bill but the problem it seeks to solve traces back nearly a decade. Under existing law, the formula that calculates what Medicare pays doctors has called for cuts every year, leading Congress to enact short-term fixes. A permanent solution has eluded Congress, largely because of the cost.

House Democrats are also considering moving a physician-payments bill in a separate, non-offset vehicle from healthcare reform.

Speaker Nancy Pelosi (D-Calif.) and Majority Leader Steny Hoyer (D-Md.) are continuing to back the House's approach, which is a permanent fix at a cost of roughly $240 billion, rather than an offset, one- or two-year fix.

But Hoyer on Wednesday expressed a new openness to consider either the permanent or the temporary fix independently of healthcare reform. "My view is that whatever we do with the doc fix, we would do with or without healthcare reform," Hoyer said. "And healthcare reform really needs to be considered on its own merit and the SGR fix on its own merit."

He stressed no final decsions have been made, but reiterated that the doc fix could occur as a separate vote.

-- Jared Allen contributed to this article.

-- This article was updated at 7:49 p.m.