Legislation to raise the debt ceiling and cut the deficit, signed by the president, leaves physicians in limbo regarding their Medicare and Medicaid payments next year and in the future.
Right now, Medicaid has been left relatively unharmed by the debt ceiling agreement, said Dr. O. Marion Burton, president of the American Academy of Pediatrics. But that could change as the deficit control process moves forward.
The new law of the land, the Budget Control Act of 2011, establishes the Joint Select Committee on Deficit Reduction, also known as the super committee. That panel is free to consider cuts in Medicare and Medicaid. The 12-member panel will be made up of legislators from both parties and both houses of Congress.
The law requires the joint committee to draft legislation cutting another $1.2 trillion to $1.5 trillion in federal spending over 10 years. The committee has broad authority to consider spending cuts, taxes, and other changes across both discretionary and mandatory government programs. Funding for Affordable Care Act programs is also on the table.
Party leaders have until Aug. 16 to choose the members of the joint committee.
At press time, it was not clear who would serve on the committee. However, Republican leaders had indicated that they would not appoint anyone who would favor raising taxes, whereas Democratic leaders had noted that they would appoint committee members who would protect Medicare, Medicaid, and Social Security.
Before the joint committee can forward its recommendations to the full Congress, those recommendations must be approved by a majority vote.
“There's a lot of concern that the committee will be deadlocked,” said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.
The joint committee must vote on recommendations by Nov. 23, and lawmakers must vote on the joint committee's bill by Dec. 23.
To keep the legislation from getting bogged down in the Senate, the Budget Control Act requires that the joint committee's bill be given a fast-track, up-or-down vote requiring a simple majority to pass each chamber.
Should the joint committee's bill fail, or if the committee deadlocks, the Budget Control Act calls for automatic cuts across the federal government totaling $1.2 trillion over 10 years.
Medicaid benefits would be exempt from those automatic cuts, but any cuts to federal aid to cash-strapped states could result in reductions in provider pay under the program. Given the large number of children covered by Medicaid, that would make it very hard for pediatricians to cope, Dr. Burton said.
“If Medicaid rates deteriorate, and there's evidence around the country that's already happening, then we'll certainly be increasingly unable to afford to take care of these children in our offices,” Dr. Burton said.
Coupled with those potential Medicaid fee cuts would be reductions of up to 2% in Medicare physician payments each year beginning in 2013, if automatic cuts went into effect.
Dr. Burton said that he is also concerned about the immediate federal spending cuts enacted under the Budget Control Act. The new law puts in place about $1 trillion in spending cuts over the next decade from the discretionary side of the federal budget. Although these immediate cuts do not directly affect physicians, they could impact programs of great importance to children, Dr. Burton said.
Lawmakers will make specific decisions about which programs get cut down the road, but with the budget reduced by about $1 trillion over 10 years, many programs could be on the chopping block. Dr. Burton said the AAP is very concerned that family planning funding, the Head Start program, and the maternal and child health block grant program will be at risk.
“All of these things support children in the socioeconomic strata that most [need] these services,” he said. “We're really concerned that they are almost immediately on the table for reductions. We pediatricians rely on those programs everyday in our practices to be able to help these children and families. If we don't have those resources in our communities all across America, I believe that children will be harmed.”
These immediate cuts will also impact graduate medical education: Medical students who take out subsidized graduate student loans on or after July 1, 2012, will have to start paying the interest on those loans earlier.
The other major uncertainty facing physicians in the deficit reduction process is what will happen with the 29.5% cut to Medicare physician fees scheduled for Jan. 1, 2012. This massive payment cut is called for under the Sustainable Growth Rate (SGR) formula, the formula used to set Medicare payments to physicians.