House and Senate at Impasse on Medicare Payments

By ROBERT PEAR
Published: February 6, 2012

WASHINGTON — House and Senate negotiators are deadlocked over how to prevent a deep cut in Medicare payments to doctors who treat millions of Medicare beneficiaries, an impasse that could threaten broader legislation on a payroll tax cut.

Lawmakers in both parties said they wanted to give doctors a small increase, but could not agree on how to cover the cost. The issue, which is being negotiated as part of the talks over maintaining a reduction in payroll taxes for 160 million Americans, pits health care providers against one another — doctors versus hospitals — in a type of conflict that is most likely to become more common as the federal government tries to throttle back the growth of Medicare costs. The payroll legislation would also continue jobless benefits for many of the nation’s unemployed.

In the absence of agreement, doctors’ fees will be cut 27 percent next month, and many doctors say they could not continue treating Medicare patients under the lower payments.

“Because of this uncertainty, some doctors are already telling patients they will no longer be able to accept Medicare,” said Representative Allyson Y. Schwartz, Democrat of Pennsylvania. Ms. Schwartz is one of 20 lawmakers trying to work out differences between the House and the Senate.

To help offset the cost of paying doctors, House Republicans want to reduce certain Medicare payments to hospitals. By contrast, Democrats and at least one powerful Republican senator, Jon Kyl of Arizona, want to cover the cost with money saved by winding down the wars in Iraq and Afghanistan.

An influential federal advisory panel has voted to recommend cutting Medicare payments to hospitals for some of the most common outpatient services, and House Republicans cite that recommendation to justify their plan.

The panel, the Medicare Payment Advisory Commission, says the government should pay the same rates for “evaluation and management” services regardless of whether they are performed in doctors’ offices or hospital outpatient departments. Rates for hospital clinics are now much higher — for example, $124 compared with $69 for an office visit involving a medium level of services to an established patient, the commission said.

Hospitals say the higher payments are justified because they treat sicker patients and have much higher overhead costs, resulting from the fact that they are open round the clock and stand ready to respond to medical emergencies.

Kenneth E. Raske, president of the Greater New York Hospital Association, said that if the cuts took effect, hospitals would curtail services and close some clinics.

“The cuts would reduce access to care for many of the nation’s most vulnerable patients and destroy our ability to invest in outpatient care, which everybody from the White House to the statehouse says we need to do to keep people healthy,” Mr. Raske said.

The American Medical Association and other doctor groups are making an all-out push for Congress to scrap the formula used to calculate their payments.

The formula sets annual goals for Medicare spending on doctors’ services. When actual spending exceeds the goals, payments are supposed to be reduced. If Congress intervenes to block a cut — as it often does — Medicare is supposed to recoup the money by making deeper cuts in future years.

Dr. Peter W. Carmel, president of the medical association, said: “There have been 13 short-term patches passed by Congress. These patches increase both the long-term cost to taxpayers and the severity of scheduled cuts to physicians who care for Medicare patients.”

Representative Henry A. Waxman, Democrat of California and a member of the conference committee, said “it makes a lot of sense to use war savings as a primary source of money” to eliminate the Medicare payment formula.

“It was Congress’s mistake to set up that formula,” Mr. Waxman said. “We should not make Medicare beneficiaries and physicians pay for our mistake.”

Mr. Kyl said it was logical to use war savings to wipe out the debt that Congress had built up by repeatedly overriding reductions in payments to doctors.

“What I’m proposing is using one budgetary gimmick to pay for another — specifically, using funds budgeted for the wars and wiping clean the bad debt accumulated” under the Medicare formula, Mr. Kyl said.

Aides to Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said he saw that approach as “a viable way” to make sure older Americans could continue visiting their doctors.

But Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, said the purpose of the House-Senate conference committee was to resolve differences between the House and the Senate. The use of war savings to pay for Medicare is “outside the scope” of the committee because it was not in the legislation passed by either house, he said.

House Republican negotiators prefer the savings in the House-passed bill, which calls for “parity in Medicare payments” in doctors’ office and outpatient hospital clinics.

Cori E. Uccello, a member of the Medicare Payment Advisory Commission, said, “It just does not make sense to pay a lot more for pretty much the same service in the hospital setting.”
Hospitals around the country are buying up physician practices, and in many cases Medicare then pays the doctors at the higher rates allowed for outpatient hospital services.

Glenn M. Hackbarth, chairman of the Medicare commission, said that this shift could —under current law — increase costs for the Medicare program and for beneficiaries, who would have higher premiums and co-payments.