Physicians will not face Medicare payment cuts this year, thanks to a compromise reached by members of Congress. But barring additional legislative action this year, doctors will see their Medicare payments cut by nearly a third come Jan. 1, 2013.

The House voted 293-132 to approve H.R. 3630, the Middle Class Tax Relief and Job Creation Act on Feb. 17. The Senate approved the measure shortly thereafter by a vote of 60-36; the President had promised to sign the bill as soon as it reached his desk.

The legislation, which has been the subject of weeks of partisan wrangling, included an extension of both the payroll tax holiday and unemployment benefits.

The bill averts the 27% pay cut that was scheduled to take effect on March 1. The statutory cut is called for under the Sustainable Growth Rate formula, which ties changes in Medicare physician payments to the gross domestic product.

Physician organizations reacted to the news with a mixture of relief and disappointment.

The American College of Physicians, the American Academy of Family Physicians, the American College of Surgeons, and the American Osteopathic Association, chastised Congress for failing to use savings from the wars in Iraq and Afghanistan to finance a permanent repeal of the SGR.

Congress would have been able to eliminate all of the accumulated and future scheduled payment cuts created by the SGR if it had reallocated the Overseas Contingency Operations funds, they wrote in a joint statement.

"Like all of the many other short-term patches that Congress had enacted over the past 9 years, the agreement fails to provide the stability in Medicare payments needed to ensure patient access to care and to advance comprehensive payment reform," the coalition wrote.

Officials at the American Medical Association reacted similarly, saying that by enacting a short-term patch, Congress was once again "kicking the can, growing the problem and missing a clear opportunity to protect access to care patient."

The bill is even more disappointing for rheumatologists and endocrinologists who were hoping for a reprieve from cuts to dual-energy x-ray absorptiometry (DXA) testing reimbursement.

Under a 2-month payroll tax extension bill enacted in December, Congress approved a temporary extension of an Affordable Care Act provision that paid for DXA at 70% of the 2006 Medicare payment rate. Because H.R. 3630 does not include that provision, Medicare payments for DXA scans will drop from about $100 to $50 starting on March 1.

The legislation is funded at the expense of several federal health programs. To pay for the SGR fix and other provisions of H.R. 3630, lawmakers stripped $5 billion from the Prevention and Public Health Fund, an Affordable Care Act program that funds preventive health programs. The reductions are slated to start in September (fiscal year 2013).

Congress also reduced the amount that Medicare will pay hospitals, skilled nursing facilities, and certain health clinics to cover bad debts from beneficiaries’ unpaid coinsurance and deductibles.

Payments to clinical laboratories were cut by 2%.

02/17/12