Fiscal cliff countdown: Medicare payments in real danger

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It's a countdown until massive cuts hit Medicare providers. With only a few days left in the calendar year, providers are waiting with bated breath about the outcomes of fiscal cliff talks on Capitol Hill. And unlike previous short-term fixes, the threat is real this time, American Medical Association (AMA) President Jeremy Lazarus told Forbes. The decision of lawmakers will determine the outcome of Medicare cuts that hang in the balance in these final weeks of the year.

Unless Congress and the White House administration can agree on plans to avoid the fiscal cliff, a 27 percent reduction in Medicare payments will go into effect Jan. 1, 2013--12 days from today.

Providers, particularly AMA, have lamented over the short-term stop gap measures--15 of them in the past decade--to the sustainable growth rate formula under the Balanced Budget Act of 1997, Forbes noted.

"For physician practices, it is a terrifying situation," Lazarus said about the reductions that could cost upwards of $35,000 per physician.

AMA yesterday wrote a letter to Congress, complaining of the holiday tradition of temporary fixes.

"This continuing game of political chicken is unacceptable and dangerous to the future of the Medicare program," AMA CEO and Executive Vice President James Madara said. "Every time, Congress assures patients and physicians throughout the year that it will not take effect; yet, we find ourselves in the same situation year after year."

Madara noted that the pattern of Congress inaction has providers unsure of their participation in mandated programs for e-prescribing, electronic health records, ICD-10 implementation and quality reporting.

Similarly, the Alliance of Specialty Medicine on Friday called for a permanent replacement to the SGR formula, noting that physicians are reconsidering their participation in Medicare at all and even turning beneficiaries away.

Hospitals, in particular, will bear the brunt of Medicare cuts, The New York Times reported.

"There is no such thing as a cut to a provider that isn't a cut to a beneficiary," said Steven M. Safyer, CEO of Montefiore Medical Center in the Bronx.

The Medicare Payment Advisory Commission recommends reining in costs by reducing payments for hospital outpatient services that have higher charges, which added $1.5 billion to healthcare costs, MedPAC said. However, the American Hospital Association blasted the "site-neutral" policy, arguing that their facilities spend more on safety-net services that other facilities don't offer and therefore are entitled to the Medicare reimbursements.

Any agreement from the latest talks between the GOP and the White House will suspend or permanently repeal the doc fix, the Fiscal Times reported.

Amid the budget negotiations between Obama and Speaker John Boehner, Republicans have proposed increasing the Medicare eligibility age to 67 from 65, as well as reviving Paul Ryan's proposed "premium support" program.

An Obama compromise this week put $400 billion in healthcare cuts on the table. Democrats may concede to eliminating the controversial Independent Payment Advisory Board, the 15-person panel charged with recommending comparative cost-effectiveness, The Hill's Healthwatch reported.

U.S. Health & Human Services yesterday sent a notice to more than a million physicians, notifying them of the reimbursement cuts, estimated at $14 billion in 2013, according to CQ HealthBeat.

If Congress does not craft a deal before the end-of-year deadline, hospitals will have some tough decisions to make. Although some executives favor the automatic cuts, viewing them as an equitable way to reduce spending, others say they will have to consider eliminating services or closing hospitals, the NYT noted.

"This is not crying wolf," Montefiore's Safyer said about the cuts. "I don't have a Plan B."

For more information:
- see the Forbes article
- here are the AMA letter and the Alliance letter (.pdfs)
- read the NYT article
- check out the Fiscal Times article
- here's the Healthwatch blog post
- see the CQ HealthBeat article (subscription required)

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