Medicare Sequester Set to Commence March 1

“The BCA’s Medicare cuts could not occur at a worse time. Medicare physician payments have been nearly frozen for a decade, while the cost of caring for patients has increased by more than 20 percent,” reads a Sept. 12 letter from physician groups, including the American Academy of Otolaryngology—Head and Neck Surgery (AAO-HNS), to House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.), who have retained leadership positions in the new Congress.

Indeed, the providers’ September study, conducted by Pittsburgh-based economic-analysis firm Tripp Umbach, showed that losses in the health care sector and related fields could exceed 200,000 jobs in just the first year. Furthermore, Medicare sequester cuts would destabilize a sector of the economy that actually saw moderate growth in otherwise difficult economic times, noted Paul Umbach, a principal of the research firm, at a September presentation of the report. The losses will eventually hurt sectors beyond health care, according to the report.

A health care program like Medicare, with such wide-ranging implications for the economy and for patients requires policy-making that goes beyond budget considerations, said Paul M. Imber, DO, chair of the AAO-HNS Legislative Representatives Committee. “There needs to be a policy emphasis rather than splitting the pie,” he said. “We agree with the concept of looking at alternative systems like a ‘medical home.’ If we’re going to go into a new system, we’ll need a transitional period. We’ll need a consistent, structured program so we can run our practices.”

The “Doc Fix”

The use of Medicare as a budget-balancing tool ignores the need to make sensible health care policy, said a Hill staffer familiar with Medicare negotiations who requested anonymity, and that is the source of providers’ frustration. Congress’s perennial habit of dealing with the sustainable growth rate (SGR) only temporarily (the “doc fix” was once again extended for a year as part of the January fiscal cliff deal that also raised some tax rates on higher earners). The SGR and the Medicare sequester ignore the need to address payment policy questions, said Dr. Imber .

Provider groups, including the AAO-HNS, in an effort to finally permanently fix the SGR, had tried to tie it with the Medicare sequester in their communications with Washington. The AAO-HNS signed on to a letter to Congress by the AMA and other providers asking for payment reform that moves Medicare from its current fee-for-service-dominated system to one that provides more certainty and rationality for physicians and patients, said Dr. Imber. They have also sent out a “Declaration of Independence” from the SGR formula in an effort to get Congress to deal with the matter once and for all.