House Republicans shoot down hopes for permanent Medicare payment 'fix'

House Republicans on Tuesday dashed the physician lobby's hopes for a permanent "fix" to the Medicare payment formula.

The American Medical Association had pinned its hopes on the 21-member GOP Doctors Caucus, which the industry group hoped would sell leadership on a permanent "doc fix" paid for with savings from winding down the wars in Iraq and Afghanistan. 

However, several of those lawmakers told The Hill that the pay-for is unacceptable and that a two-year fix is the most doctors can expect for the holidays.

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"I think we need a permanent [sustainable growth rate] fix," said Rep. Scott DesJarlais (R-Tenn.). "That being said, I doubt we're going to get that this week or next week. So I think the Doctors Caucus would settle for a two-year fix, but we still would like to see a permanent repeal."

DesJarlais added that the proposed pay-for was not "real money."

"That's like saying I was going to buy a new car next year but I'm not and therefore we've got 40,000 extra dollars," he said. "That defies logic, really."

Without congressional action by year's end, physicians will see their Medicare payment rates cut nearly 30 percent on Jan. 1. Kicking the can down the road one year is expected to cost about $21 billion, while a two-year "patch" would cost around $38 billion.

The American Medical Association in a conference call Monday evening said it planned to pursue a "bottom up" strategy targeting House GOP doctors to lean on leadership for a permanent repeal, according to a source who was on the call. The $300 billion would be offset by the $600 billion in unused war funding.

The two-year doc fix is expected to be packaged over the next few days with other must-pass legislation extending unemployment benefits and payroll tax cuts. But the two chambers don't see eye to eye on how to pay for it.

Senate Democrats on Tuesday continued to advocate for war funding to be used as the pay-for.

Senate Majority Leader Harry Reid (D-Nev.) said the "doc fix" was something lawmakers "have to do."

"As Sen. [Jon] Kyl [R-Ariz.] said, it's all Monopoly money, and we should use the overseas contingency fund to pay for that," Reid told reporters. "I hope that's, in fact, what Sens. Kyl and [Max] Baucus [D-Mont.] work out" in their negotiations.

Sens. Tom Harkin (D-Iowa) and John Kerry (D-Mass.) shared the same view.

House Republicans, however, say the war savings are "funny money."

Rep. Michael Burgess (R-Texas), a member of the Doctors Caucus, said he "get[s] what Sen. Kyl is saying" about using the fake savings from the wars to pay for the fake "doc fix" issue but that he still wasn't totally comfortable with that offset. 

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"It just doesn't feel right, though," Burgess said. "It feels like smoke and mirrors."

Democrats, meanwhile, said Republican proposals to pay for the doc fix by cutting the healthcare reform law are a nonstarter.

Harkin vowed that "isn't going to happen," while Baucus called the proposal "not a good idea at all."

"I think we should work toward something that can pass," he said.

Several healthcare sector savings plans that were bandied about during deficit negotiations remain options, said a House leadership aide. Such proposals included making wealthier seniors pay more for their Medicare benefits and eliminating first-dollar coverage in Medigap policies.

— Sam Baker contributed to this report.