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ASA Withholds Support for New Medicare Physician Payment Fix

Wednesday, May 26, 2010

ASA will not support pending Medicare physician payment provisions that are part of H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010. The provisions included in the legislation also known as the “Tax Extenders” bill are designed to avert a 21 percent Medicare physician payment cut scheduled to take effect on June 1, 2010.

Pursuant to the flawed Medicare Sustainable Growth Rate (SGR) formula, Medicare physician payments were originally scheduled to be cut by 21 percent on January 1, 2010. To avert the cut, Congress has acted in recent months on a series of 30 and 60-day “fixes” to avert the payment changes. The most recent 60-day “fix” is scheduled to expire on June 1.

Presently, the U.S. House of Representatives is scheduled to vote on H.R. 4213 which halts the June 1 cut and provides three and one-half years of temporary relief from the SGR formula and its projected cuts. The Senate is expected to take up the bill shortly after House action. The relevant provisions of H.R. 4213 include the following changes to the Medicare conversion factor:

  • Effective June 1 - December 31, 2010: +1.3 percent update
  • Effective January 1 - December 31, 2011: + 1 percent update
  • Effective January 1, 2012 - December 31, 2013: Implementation of a new temporary alternative to the SGR formula. The new formula divides physician services into two “buckets” or service categories – primary care services and all other services – creating separate updates. The alternative also provides for a floor of 0 percent to prevent any specialty from experiencing a payment reduction. Special provisions would also allow physicians in Accountable Care Organizations (ACO) to establish ACO-specific payment update mechanisms.
  • Effective January 1, 2014: The alternative formula is halted and payment rates return to levels determined by the previous SGR formula.

H.R. 4213 includes no provisions to address the longstanding problems inherent to the current SGR formula. Indeed, the SGR formula remains in effect even during the period in which the temporary alternative is in use. As a result, Medicare physician payments are projected to be cut 35 percent effective January 1, 2014.

“We cannot support the Medicare physician payment provisions of H.R. 4213,” said Alexander Hannenberg, M.D., ASA President. “In addition to sub-inflationary updates in 2010 and 2011, followed by probable payment freezes in 2012 and 2013, a proposal with a payment reduction of over 30 percent in 2014 is not what we had hoped to see,” he added. “Because of the underlying inadequacy of Medicare payments for anesthesiology services, our specialty is uniquely vulnerable to the proposal. We recognize the enormously challenging financial environment but seek an immediate remedy that creates the fewest obstacles to permanent reform of the SGR formula.”

ASA will continue to lobby for changes that protect payments for anesthesia services while also carefully monitoring SGR developments. ASA urges Congress to fully repeal the current SGR formula and implement a new Medicare physician payment update mechanism that accurately reflects the increasing annual costs of providing services to Medicare beneficiaries.

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