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Life Health > Health Insurance > Medicare Planning

Congress votes to give doctors a raise in U.S. Medicare payments

By Kathleen Hunter

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(Bloomberg) — The Senate passed and sent to President Barack Obama legislation to avert a pay cut for doctors who treat Medicare patients, just hours before reductions would start affecting physicians.

The Senate voted 92-8 in favor of the measure after rejecting amendments that would have required additional House action.

See also: Medigap issuers may take a hit

“The reductions in doctors’ reimbursement would take effect at midnight tonight, so I think there’s a bipartisan desire to move forward,” Senate Majority Leader Mitch McConnell, a Kentucky Republican, told reporters Tuesday before the measure passed. Afterward, in a stement he termed the bill “a sensible compromise.”

The measure marks a rare bipartisan agreement for Congress, which has suffered from low public approval ratings amid gridlock and a partial government shutdown in 2013. The House passed the legislation 392-37 on March 26.

“This is great. Let’s do more of this,” Obama said after the House vote last month.

After the Senate passed the bill, Obama said in a statement that he would sign it. 

The legislation would eliminate an annual headache for Congress. Lawmakers have voted 17 times since 2002 to stop an existing Medicare cost-containment plan from cutting the pay of doctors who participate in the health-care program for the elderly. Medicare is projected to cost $622 billion in fiscal 2015.

The bill, H.R. 2, would replace the Medicare sustainable growth rate (SGR) formula for physician payments in place since 1997. The American Medical Association, the largest U.S. doctors’ organization, has lobbied annually to head off the pay cuts. The current formula would cut doctors’ pay 21 percent.

Children’s health

The measure also would extend the Children’s Health Insurance Program (CHIP) for two years past its current Sept. 30 expiration.

Congress’s Gallup Poll approval rating, which fell as low as 9 percent in November 2013 after a partial government shutdown, reached 20 percent in February.

House votes on the Medicare bill and the chamber’s fiscal 2016 budget marked a turnaround from earlier disputes among Republicans that almost led the Department of Homeland Security to shut down and forced Speaker John Boehner to pull some bills for lack of support.

Democrats supported the Medicare measure because they see it as delivering benefits to low-income senior citizens, children and families. They say it would help low-income seniors pay their Medicare Part B premiums, add $750 million for training nurses and doctors, and secure money for community health centers and CHIP.

Pay raises

The bill would provide doctors with annual 0.5 percent pay raises for five years. After that, rates would be frozen for five years and physicians would be asked to participate in programs that pay bonuses for performing well in quality-of-care tests.

Starting in 2026, physicians’ base Medicare pay would again rise by at least a quarter of a percentage point per year, in perpetuity.

The Congressional Budget Office (CBO) says the legislation would cost taxpayers $141 billion in its first decade, a price tag that would usually cause revolt among fiscal conservatives. An alternate CBO analysis said the measure would cost less than freezing physicians’ Medicare payments for the next 10 years.

The measure would save $70 billion by limiting or cutting some payments to hospitals and other health-care providers and requiring Medicare’s most affluent recipients to pay more out of pocket.

Adjusted for medical inflation, physicians’ pay under Medicare has fallen 18 percent since 2001, according to the AMA. Congress often reduced spending in other parts of Medicare to prevent cuts in payment rates for physicians.

Those policies have collectively saved about $165 billion, according to the Committee for a Responsible Federal Budget, a nonprofit group that advocates for lower national debt.

—With assistance from Alex Wayne, Billy House, James Rowley and Kathleen Miller in Washington.

See also: 2015 Medigap outlook [Infographic]

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