Medicare payments to physicians will be slashed by 29.4% on Jan. 1 unless Congress acts to avert the scheduled cut, according to an estimate from the Congressional Budget Office.
Last year, Congress passed a 1-year pay fix that kept Medicare fees to physicians at 2010 rates through the end of 2011. Come January, though, physicians will be faced with paying the bill on years of accumulated pay cuts.
The new report from the nonpartisan Congressional Budget Office (CBO) also outlines the costs of various proposals to replace or revamp Medicare's Sustainable Growth Rate (SGR), the formula that requires annual cuts to physician pay whenever actual spending on physician services exceeds spending targets. For example, if Congress were to throw out the SGR and simply freeze Medicare payments to physicians at current rates, the cost to the federal government would be almost $298 billion over 10 years. Offering physicians a 2% pay bump in each year through 2021 would raise the price of the fix to $389 billion over the decade.
A somewhat less expensive option would be to reset the SGR instead of replacing it. Under that option, Congress would forgive all spending above the cumulative targets as of the end of 2010. Going forward, 2011 would be the baseline period for the application of the SGR and in 2012 physicians would receive an increase equal to the Medicare Economic Index. That option would cost about $195 billion over 10 years.
Lawmakers on the House Energy and Commerce Committee are considering the options for replacing the SGR. They recently held a hearing in which they solicited ideas from several of the major professional medical societies on what could replace the SGR. Rep. Michael Burgess (R-Tex.), a member of the committee, said that the goal was to enact a permanent solution to the Medicare physician payment problem this year.