A closer look at latest 'doc fix'

As part of the fiscal deal, a scheduled cut in Medicare physician payment rates was postponed -- but its 10-year price tag is being borne by other health care players, especially hospitals.

CQ HealthBeat: Sectors Hit By 'Doc Fix' Offsets May Keep Taking Their Lumps
As anxious as their advocates might be to see the Medicare and Medicaid payments cut by the fiscal cliff measure now awaiting President Barack Obama's signature restored, health care sectors that felt the budget blade could be in for a few more whacks in the coming months. The cuts in the fiscal cliff measure the Senate and House cleared this week offset the $25 billion cost over 10 years of continuing current Medicare physician payment rates through the end of 2013. But other cuts may be coming as lawmakers move to reduce deficit spending. Hospitals, for example, took about $15 billion in cuts to Medicare inpatient payments stemming from bill coding practices and reduced Medicaid "disproportionate share" payments to treat poor patients (Reichard, 1/2).

The Medicare NewsGroup: Docs Have Lived Under SGR Since '97, And Threats Of Cuts For A Decade
The SGR worked okay in the late 90s and early 2000s, when the economy was growing fast. During this time, physicians received significant increases in their payment updates. In 2002, the economy slowed and the SGR began turning out negative numbers. Congress let the cuts go into effect the first year (a 4.8 percent cut), but since then, they've passed legislation to defer the cuts. The SGR is cumulative, so cuts have grown from year to year. Congress is now afraid to permanently repeal the SGR because without it, they fear there will be no control whatsoever on the volume and intensity of physician services, [Stuart Guterman, vice president and executive director of the Commission on a High Performance Health System at The Commonwealth Fund] said (Sjoerdsma, 1/2).

The Medicare NewsGroup: Docs Spared From Fee Cuts In Fiscal Cliff Deal, But Say Permanent Fix Needed
There's bi-partisan agreement that the SGR formula, passed into law with the Balanced Budget Act of 1997, is flawed. Congress has passed 12 short-term patches since 2003 to keep the formula from going into effect. The Medicare Payment Advisory Commission (MedPAC), the group of experts who advise Congress on Medicare payments, has said that Congress has two options for dealing with the problem. Option one: Repeal the SGR and accelerate adoption of new payment models that improve quality and lower costs. Option two: Tweak the SGR or replace it with a new spending target. In option two, Congress should still experiment with new payment models (Sjoerdsma, 1/2).

The Medicare NewsGroup: A Look At Medicare Costs And Cuts In The Fiscal Cliff Deal
The "doc fix" included in the American Taxpayer Relief Act of 2012 averts a 27 percent pay cut slated to hit doctors on Tuesday due to the sustainable growth rate. But the $30 billion price tag of that patch is offset in the bill by cuts in reimbursement to other Medicare providers over the next ten years. Hospitals will fare the worst, picking up nearly 50 percent of the tab. Below is a detailed breakdown of the bill's Medicare provisions, and how they impact spending compared to the CBO's "current law" baseline (Solana, 1/2).

Philadelphia Inquirer: Hospitals To Eat Medicare Budget's 'Doc Fix
The budget package that Congress passed Tuesday to avert widespread tax increases and spending cuts blocked a 26.5 percent cut in Medicare payments to doctors, but hospitals and other health-care providers are paying for it. Even so, the head of a local hospital group was glad that the new law prevented the reduction in doctor payments linked to a 1997 law. "That's becoming increasingly relevant for hospitals" as they employ more physicians, said Curt Schroder, regional executive for the Delaware Valley Healthcare Council. But Sean Hopkins, senior vice president of the New Jersey Hospital Association, was disappointed that money to pay for keeping doctor payments level came from hospitals, many of which are already struggling to break even. "Hospital Medicare payments continue to be viewed as a big bucket you can take a little bit out of with without making a difference," said Hopkins. "But you can die a death of a thousand cuts" (Brubaker, 1/3).

The Wall Street Journal's Washington Wire: Cliff Deal Irks Hospitals
Now that health-care providers have sifted through the fiscal-cliff package, one group is emerging as the most upset with the deal: hospitals. Several pieces of the bill, which is headed for President Barack Obama's desk, would reduce federal payments to hospitals in exchange for staving off cuts to doctor's pay. Hospitals are calling it a raid on their funding, which has already been subject to cuts in the health overhaul law (Radnofsky, 1/2).

The Miami Herald: Fiscal Cliff Compromise Will Cost Florida Billions
Congress may have kept the nation from going over the fiscal cliff, but it failed to avert a multi-billion dollar hit to Florida's struggling economy. ... Under the bill, Congress voted to halt a $30 billion cut in payments to physicians who treat Medicare patients that was scheduled to take effect this week. The solution calls for hospitals that treat those patients to pick up half the tab over the next 10 years. That worries Florida's public and teaching hospitals, which serve a larger percentage of Medicare patients than hospitals in other states. These Florida hospitals are already facing $654 million in annual cuts thanks to the Affordable Care Act on top of $1 billion in cuts imposed on them by state lawmakers over the past decade (Klas, 1/2).