Will the Physician "Doc Fix" issue get addressed before June 1st Deadline?

Potential progress this week on the Medicare Physician Reimbursement "Doc Fix" issue which would create a 21% cut for physicians unless the temporary fix that expires on June 1st is addressed. The issue is being included in a Tax Extenders Bill that includes a wide range of provisions.

Yesterday, House Ways and Means Committee Chairman Sander Levin (D-MI) and Senate Finance Committee Chair Max Baucus (D-MT) circulated a $220 billion tax extenders bill (H.R. 4213) that includes a Medicare physician payment adjustment, an extension of unemployment benefits and COBRA subsidies, an a number of other health care provisions. Details are limited but the proposal includes a plan to block scheduled cuts in Medicare reimbursement for physician services through 2013. According to the bill summary and reports from policy insiders, the proposal would provide a 1.3% rate increase starting June 1 for the remainder of 2010, and an additional 1% increase in 2011. There would be no reductions in 2012 and 2013, and there would be an allowance for payment increases for primary care and preventive care services.

As an offset to the cost of the physician pay "fix" - currently being assessed by the Congressional Budget Office (CBO) - the proposal would change Medicare's "72-hour" rule, disallowing hospitals from submitting separate claims for inpatient and outpatient care provided within 3 days of a hospital admission, a proposal the hospital industry is lobbying against heavily, as it represents further cuts to hospitals on top of the hit the industry will take under the new reform law.

The proposal also includes an expansion of the 340B drug discount program to inpatient drugs for use by patients who do not have prescription drug coverage. However, the language related to expansion of 340B to include inpatients appears to provide new clarity and restrictions regarding the use of 340B drug discounts to only eligible patients within eligible entities. This is a critical issue since current 340B drug discount programs in the outpatient setting appear to be used for all patients by eligible facilities. The details of this provision will be critical to watch should this legislation move forward.

House Democrats have been working since last year toward at least a 5-year solution to the ongoing cuts created by the SGR, but the Senate consistently raised cost concerns and does not support a longer term fix that is not paid for. Physician advocates, while desperate for some form of relief from the imposing 21% cut, continue to push for a permanent fix to the perennial payment problem created by the SGR. About the current proposal, physicians fear that the current problems will only be exacerbated in 2014 when payment rates would revert to the current formula.

In other relief provisions, the bill would extend by 6 months increased federal payments for Medicaid programs (initiated in the American Recovery and Reinvestment Act of 2009, ARRA). Additionally, the bill would also extend, through the end of the year, the 65% COBRA subsidy, also effectuated by the ARRA.

The tax extenders bill is scheduled to be taken up by both chambers next week with some urgency as the current delay in cuts expires May 31st.