This Week's News

Jan. 1 Medicare pay cut averted, but SGR formula still must be repealed

A 26.5 percent cut to Medicare payments was prevented at the last minute New Year's Day, but a similar cut will threaten again next year, thanks to the persisting sustainable growth rate (SGR) formula.

The U.S. House of Representatives on Tuesday passed the American Taxpayer Relief Act, also known as the Middle Class Tax Relief Act, delaying the massive Medicare physician payment cut until Jan. 1, 2014. The U.S. Senate previously approved the package with a vote of 89-8.

The package provides for the following actions:

• Extending current Medicare physician payment rates and the current Geographic Work Adjustment floor through Dec. 31, 2013.
• Deferring sequestration cuts for two months. This deferral includes the 2 percent cut in Medicare payments and larger cuts for other health programs, including research, public health initiatives and training of health care professionals.
• Creating a path to improve the provision of relevant and timely data to physicians. Such data is necessary for new delivery and payment models. The AMA helped frame these provisions in bipartisan negotiations with Senate Finance Committee staff.
• Allowing physicians to participate in clinical registries to meet Medicare quality reporting requirements. The AMA's negotiations with the Senate Finance Committee staff also helped frame this provision.
• Reauthorizing funding for the National Quality Forum for one year.

Read a summary of the health care provisions included in the package.

The $25 billion cost of these changes was offset by an array of provisions. In accordance with the call of the AMA and many other prominent physician organizations, Congress did not adopt proposals to eliminate the increase in Medicaid payments for primary care services. However, payments for advanced imaging services will be reduced based on a change in assumptions regarding the utilization of equipment.

While the immediate crisis was averted, the cause of the Medicare cut threat remains to be addressed.

"This last-minute action on the part of Congress is a clear example of how the Medicare program is increasingly unreliable for physicians and patients," AMA President Jeremy A. Lazarus, MD, said in a statement. "This patch temporarily alleviates the problem, but Congress' work is not complete; it has simply delayed this massive, unsustainable cut for one year. Over the next months, it must act to eliminate this ongoing problem once and for all."

Read more about the AMA's commitment to working with Congress to repeal the SGR formula and move toward a high-performing Medicare program in a recent blog post by Dr. Lazarus.