The Joint Select Committee on Deficit Reduction failed to produce a plan to cut federal spending, triggering a process slated to cut physician pay and a host of public health programs beginning in 2013. It also leaves physicians facing a 27% Medicare pay cut in January.
On Nov. 21, just hours before the midnight deadline for the so-called supercommittee to publicly announce a deficit-reduction plan, the cochairs of the committee issued a statement saying that they could not reach a bipartisan agreement.
"Despite our inability to bridge the committee’s significant differences, we end this process united in our belief that the nation’s fiscal crisis must be addressed and that we cannot leave it to the next generation to solve. We remain hopeful that Congress can build on this committee’s work and can find a way to tackle this issue in a way that works for the American people and our economy," according to the statement from Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.).
The bipartisan, bicameral committee of 12 lawmakers was convened last summer as part of the Budget Control Act and tasked with finding about $1.2 trillion in cuts to federal spending over a decade. Under the law, should the supercommittee fail to agree on how to meet that goal, automatic, across-the-board cuts called "sequestration" go into effect starting in 2013.
The cuts would be evenly divided among defense and nondefense spending. Most federal programs are subject to the cuts, except Social Security, Medicaid, the Children’s Health Insurance Program, and other low-income programs. The Medicare program is spared some of the deepest cuts since the law calls only for provider cuts, which are capped at 2%.
Dr. Virginia L. Hood
Physicians’ groups expressed disappointment that several weeks of hearings and closed-door meetings had not resulted in a plan. The automatic cuts would endanger everything from military health care, medical research, and disease prevention programs to the training of primary care physicians, Dr. Virginia L. Hood, president of the American College of Physicians, said in a statement.
She urged Congress not to let the sequestration process take effect. Instead, she called on lawmakers to craft a plan to reduce the deficit in a more deliberative way, looking at the cost drivers in health care instead of allowing the across-the-board cuts. The ACP has already provided members of Congress with a list of possible cuts that could produce between $500 billion and $800 billion in savings over the next decade.
For instance, the ACP favors giving the federal government authority to negotiate the prices for drugs paid for by Medicare, a policy change that they estimate would save about $300 billion over 10 years. The federal government also could realize about $62 billion in savings by enacting a medical liability reform plan that includes a $250,000 cap on noneconomic damages, according to the ACP.
But the more pressing concern for doctors is the 27% Medicare physician fee cut that will take effect in a few weeks if Congress doesn’t take action to stop it.
Physicians’ groups intensely lobbied the supercommittee to make replacing the Sustainable Growth Rate (SGR) formula, used in setting Medicare payments, part of any deficit-reduction plan. Now the task of getting a permanent SGR fix will be much more difficult, said Robert Doherty, ACP’s senior vice president for government affairs and public policy.
There had been some interest among the supercommittee members in addressing the SGR, and a large deficit-reduction package was a reasonable place to deal with such an expensive problem, Mr. Doherty said in an interview. As part of a $1.2-trillion package, it was possible to find the necessary $300 billion in offsets to pay for a fix. Finding those offsets would be much harder in a stand-alone bill.
But while Mr. Doherty said the supercommittee’s failure represents a "huge lost opportunity" on the SGR, the ACP is not giving up. He said the group favors a proposal from Rep. Allyson Schwartz (D-Pa.) to permanently repeal the SGR. The proposal, known as the Medicare Physician Payment Innovation Act, would stabilize Medicare physician payments for several years before moving to new payment systems.
Specifically, Rep. Schwartz proposes that the Center for Medicare and Medicaid Innovation come up with at least four new payment and delivery models. Starting in 2017, physicians could choose one of those new models or stay in the traditional fee-for-service system, but fee-for-service payments would begin to decline in 2018. At press time, the proposal had not been formally introduced in Congress.