ASA April 2007 Newsletter

“Huge Additional Medicare Payment Cuts Looming for 2008: The Time to Lobby Is Now!”

Ronald Szabat, J.D., LL.M.
Chief Operations Officer – External Affairs and General Counsel

t’s official. The Centers for Medicare & Medicaid Services (CMS) has now notified the Medicare Payment Advisory Commission (MedPAC) — the group to which Congress turns for policy options — that Medicare payments will be cut 9.9 percent on January 1, 2008. In its recent five-page announcement with almost an equal number of technical attachments, MedPAC lays out the two key reasons for its ominous prediction: the tyrannical sustainable growth rate (SGR) formula and the deliberate short-funding of this year’s payment freeze by the ousted House and Senate Republican majorities.

In other words, because of the formula that Congress put in place in 1997 through the Balanced Budget Act in the form of the SGR — a “no win” formula for future Medicare physician payments — all physicians face another 5-percent cut in 2008. That has been more or less the case for several years as ASA, the American Medical Association and all of organized medicine have pushed back mightily in the face of higher costs and more and more Medicare services being demanded by the elderly.

So what is new for 2008? The simple answer lies in the short-funding of Medicare physician payment relief for 2007, when Congressional Republicans pushed through one last $38-billion tax giveaway to corporate America, including $6 billion for Indian-American gaming casinos, and deliberately failed to fund the current one-year Medicare payment freeze over the required five-year budget window. Translation: Congress violated its own rules in failing to allocate the required $12 billion for a true 2007 Medicare physician freeze, which should have been accounted for over multiple years. This meant that Republicans left Democrats holding the bag to pay for this year’s freeze, which now means that Medicare payments must be cut 10 percent next year unless Congress acts.

Will Congress do so? The answer depends on you. Reading the tea leaves from its recent actions, it is clear that Congress is getting battle-weary about dealing with this perennial issue. What is worse is that the cost for a permanent solution is well over $200 billion. But even shorter-term relief is extremely expensive — if it is properly funded. And deficit-reduction rules recently put into place by House and Senate Democrats will make this even tougher. Under “pay-go” or “pay-as-you-go” federal budgeting, Congress now must literally cut another program or raise taxes when it adds any money to one program. This was not the case during the Republican-controlled congressional years when taxes were cut willy-nilly for all manner of corporate interests and appropriations were ear-marked for thousands of nonentitlement concerns.

And has MedPAC recommended any viable options for long-term SGR relief? Unfortunately the answer is “no.” While MedPAC has studied lots of far-flung ideas, such as “regional caps” and other such untested alternatives and ill-formed targets, no firm recommendations were made to Congress last month during multiple days of hearings. Already Democrats in Congress are saying that long-term relief will not be possible this year, although they seem open to another patch.

Against this backdrop, every ASA member needs to contact Congress now to urge relief. Fresh on the heels of the 8.9-percent regulatory hit that Medicare anesthesia payments experienced starting in January, further cuts of an even larger magnitude are unthinkable.

Please push back now by visiting your ASA Web site at www.ASAhq.org/news/news021907.htm, where merely entering your ZIP code will speed you to a message delivery system to Congress. Even better, please pick up the telephone today and call your representatives and senators in Washington or at home. Nine out of 10 ASA members are not availing themselves of these easy ways to help our specialty.

So are you for the cuts or against them? If you don’t speak up, Congress may not act!