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Supercommittee Failure Leaves 27 Percent Medicare Payment Cut in Place

AMA Alert
Nov. 21, 2011

With the Joint Select Committee on Deficit Reduction failing to reach agreement on a deficit-reduction proposal, physicians still face a 27 percent cut in Medicare physician payments scheduled to take effect Jan. 1. Congress has missed an opportunity to address the nation's fiscal problems, stabilize the Medicare program and permanently repeal the sustainable growth rate (SGR) formula.

"The deficit committee had a unique opportunity to stabilize the Medicare program for America's seniors now and for generations to come," AMA President Peter W. Carmel, MD, said in a statement. "Once again, Congress failed to stop the charade of scheduled annual physician payment cuts and short-term patches that spend more taxpayer money to perpetuate a policy all agree is fatally flawed. A decade of uncertainty and repeated threats of steep cuts threaten access to care for seniors and military families who rely on the Medicare and TRICARE programs."

Proposals to repeal the SGR fell victim to disagreement over fundamental principles for achieving deficit reduction. Sharp partisan division over the mix of entitlement cuts and tax hikes prevented the supercommittee from reaching any agreement on a deficit-reduction package.

Sen. Max Baucus (D-Mont.), Sen. John Kyl (R-Ariz.) and Senate Majority Leader Harry Reid (D-Nev.) were among the leading advocates for SGR repeal in the supercommittee negotiations. Earlier this year, Sen. Pat Toomey (R-Pa.) had also offered a deficit reduction package that included SGR repeal.

Congressional action expected to avert 27 percent cut on Jan. 1

Democratic and Republican leaders in Congress have publicly stated their commitment to take action this year to avert the 27 percent cut. Options for SGR relief outside of the supercommittee process have ranged from short-term patches of a year or two to longer-term relief that provides for transition to a new Medicare physician payment system.

The scope of the next SGR intervention will not come into better focus until Congress returns from its Thanksgiving break. Congress has a number of items of unfinished business that require action before departing for the Christmas holidays. Stay tuned for future updates via the Physicians' Grassroots Network and other AMA communications.

Medicare participation/nonparticipation status

Medicare carriers have distributed information to determine if physicians want to modify their status as participating or nonparticipating physicians. The AMA has developed the "Know your options: Medicare participation guide" to help physicians evaluate their options and choose the direction that is suitable for their practice.

The kit contains a detailed explanation of physician options, a calculator and various sample materials for communicating with patients. Given the current level of uncertainty, physicians may want to defer making a decision on their participating/nonparticipating status for a few weeks. Physicians have until Dec. 31 to modify their status.

What can you do at this juncture?

Register your strong concerns with your members of Congress that yet another SGR deadline is approaching and Congress has yet to act. Call the AMA grassroots hotline at (800) 833–6354 and ask your representatives and senators what specific steps they will take to end the annual SGR fiasco.

If they tell you that they are "with you," remind them about the multiple missed deadlines in 2010.  Physicians and their patients need action rather than vague expressions of support.

Thanks for past grassroots efforts; frustration, fatigue understandable

AMA elected leadership and management thank all of you who have responded to our calls to action. Your hard work has helped us generate a massive grassroots outcry from both physicians and patients on behalf of SGR repeal, with more than 250,000 email and phone call contacts to Congress on this issue in just a few months.

Everyone in the medical community is tired and frustrated with the annual Medicare payment battle. Responsibility for the current situation rests squarely with one group: Congress. Medicine should not beg or plead for short-term relief that grows the problem. It is up to our elected leaders to carry out commitments made to physicians and patients. 

Sequestration cuts

Current law stipulated that across the board cuts totaling $1.2 trillion will be imposed in 2013 if the supercommittee fails to achieve this targeted amount. This spending reduction is to be equally divided between defense and non-defense programs.

Medicare cuts are limited to a 2 percent reduction in provider payments. This sequestration cut would be separate or on top of any potential SGR reduction. Given the severe cuts that sequestration would impose on defense and other programs, there has been extensive discussion by members of Congress regarding passage of new legislation to prevent sequestration from being implemented in 2013.