Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Hospitals Brace to Fend Off Cuts as Permanent ‘Doc Fix’ Remains Elusive

By John Reichard, CQ HealthBeat Editor

October 1, 2014 -- Congress isn’t likely to tackle an overhaul of Medicare’s oft-criticized physician payment formula during a lame-duck session but could accomplish the task as part of efforts to raise the government’s statutory borrowing authority next year, according to a top lobbyist for hospitals.

If that fails and lawmakers can’t find another way to offset the cost of scrapping the formula, Congress may have to pass another law temporarily blocking scheduled payment cuts, said Chip Kahn, president of the Federation of American Hospitals.

The latest patch (PL 113-93) expires at the end of March, and Kahn has a vested interest in what happens next. Lawmakers have offset the costs of blocking payment cuts to doctors by trimming Medicare payments to other providers, including hospitals.

The 17 patches Congress has passed so far temporarily blocking cuts have cost more than $170 billion, the American Medical Association recently estimated. That compares to the roughly $130 billion over 10 years the Congressional Budget Office projected it would take to scrap the formula entirely.

Extensive talks between the Senate Finance Committee and the House Ways and Means and Energy and Commerce committees on policy provisions on replacing the so-called Sustainable Growth Formula didn’t yield a resolution, with lawmakers still divided over how to cover the cost.

“We could be back into another patch,” Kahn said in an interview this week with CQ HealthBeat.

Senate Finance Committee Chairman Ron Wyden, D-Ore., has expressed an interest in replacing the SGR during the lame duck. For that to happen, Kahn said, lawmakers would have to use war savings from the Overseas Contingency Fund or find another source to avoid major cuts for Medicare beneficiaries or providers.

A number of Republicans oppose using the contingency fund. But lawmakers also are weary of repeating forestalling payment cuts or pondering deep entitlement cuts. That’s stirring hope among health care lobbyists that with the elections safely past, lawmakers will scrap the SGR without doing offsets.

“Sometimes in lame duck sessions, there’s a willingness to agree to act in a budgetary way that there might not be once you get into the regular Congress,” Kahn said.

Still, he rates the odds at no better than 20 to 30 percent because of likely objections from conservatives such as Sen. Ted Cruz of Texas.

Another vehicle could be legislation to raise the debt ceiling that is expected next year. That, too, is likely to arouse the ire of a number of conservatives who insist on offsets. But Kahn says “if you look at the configuration of the vote for the debt ceiling, those who might not be sympathetic with just letting it go are not going to vote for the debt ceiling anyway.”

The options have left hospitals and other providers bracing for possible cuts if Congress takes up another temporary payment patch.

The hospital federation says its members have already absorbed huge cuts from the health care law (PL 111-148, PL 111-152) and subsequent legislation and should be insulated from further reductions. But a recent announcement by the Obama administration that hospitals have saved billions in uncompensated care costs because of the health law could make the industry a target once again.

Although those costs were supposed to drop, they haven’t as much as originally expected because the health law hasn’t expanded insurance in all states as hospitals expected. The fear in the industry is that memories of that may be short on Capitol Hill.

Publication Details