Last Friday, lawmakers voted to postpone a 27.4 percent payment cut to doctors as part of its payroll tax cut package. The postponement of the pay cut provides temporary relief for doctors but increases the federal deficit and has angered those in the healthcare sectors paying for it.
“… it is clear that hospitals bore a majority of the healthcare-related spending cuts, so it is not an overstatement to say that the legislation generally robbed Peter to pay Paul, transferring wealth from hospitals to physicians,” said Ken Perez, director of healthcare policy and senior vice president of marketing at MedeAnalytics, a healthcare performance analytics company.
The pay cut postponement, which keeps payment rates at the 2011 level, is being paid for by about $21 billion in cuts to federal healthcare spending. Those cuts include $5 billion from the Affordable Care Act’s prevention trust fund and nearly $11 billion in cuts to hospitals.
“While we support ensuring that physicians will not see their Medicare payments reduced, we are extremely disappointed that once again Congress is putting seniors’ access to hospital services in jeopardy through arbitrary reductions to hospitals,” said Rich Umbdenstock, president and CEO of the American Hospital Association in a statement released last week. “(The deal) is shortsighted and overlooks the critical role hospitals play in supporting a broad range of services to the elderly.”
Prevention advocates also decried the deal made by lawmakers. “We’re robbing from the one place in the Affordable Care Act where we can really do something about prevention,” Kenneth Thorpe, director of the Partnership to Fight Chronic Disease, told The Fiscal Times. “The fact that it ends up propping up a collapsing fee-for-service system is the ultimate irony.”
The postponement of the scheduled cut to Medicare’s physician payment rate also impacts the federal budget baseline laid out by the Congressional Budget Office earlier this month.
In its budget projections for the next decade, the CBO said that if Congress postponed the cut to physicians, keeping their payment rate at 2011 levels, Medicare outlays through 2022 would be about $316 billion (about 4 percent) higher than the CBO’s baseline projections.
“With this 10-month doc fix …. a deep payment rate cut for physicians has been averted,” Perez noted. “But this latest ‘kicking the can down the road’ does not provide a permanent solution, and the unresolved (sustainable growth rate) issue will continue to be integral to the calculus of deficit reduction and therefore a factor in the appraisal of our nation’s creditworthiness by the credit rating agencies.”
President Barack Obama is expected to sign the legislation soon.
Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.