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From The CQ Newsroom: Medicare Physician Payment Cut Fix Unlikely in 2006

By Drew Armstrong, CQ Staff

November 21, 2006 -- Talk of warding off scheduled cuts for Medicare's physician payment rates took a pessimistic turn Tuesday after lawmakers said a post-Thanksgiving lame-duck session is likely to be brief. On top of that, any effort to add that proposal to a package of tax "extenders" might be risky at best.

The tax extender legislation (HR 5970) has been described as relatively benign and is ensured of passage on its own. For that very reason, some see it as a vehicle for physician payment legislation.

But if lawmakers try to attach non-germane amendments in a last-ditch effort before Congress adjourns, an overburdened legislative vehicle could overturn and wreck—especially if lawmakers see it as the only moving item in a short December session. The tax extender bill is a collection of continuations for expiring or expired tax breaks such as the credit for research and development expenditures and the deduction for college costs.

Lawmakers will not have the option of using the remaining fiscal 2007 appropriations bills as an alternative hitch for such last-minute priorities, after the announcement that they would be punted to the 110th Congress. Instead, legislators will pass a short-term continuing resolution, or stopgap spending measure, when they return the week of Dec. 4.

Given that they plan to adjourn quickly afterward, that leaves little time to pass legislation intended to stop cuts to Medicare physician pay rates.

If the payment cuts go through on Jan. 1, doctors will see a 5.1 percent reduction in payments to treat Medicare patients. The American Medical Association (AMA) says a reduction that size would propel many doctors to stop accepting new Medicare patients, potentially limiting seniors' access to health care.

Optimism over the issue has slowly declined since September, when GOP lawmakers said they would work until Christmas Eve, if necessary, to find a solution. But over the past several weeks, especially since the midterm election losses of the Republican majority in both chambers, the outlook has gone from somewhat hopeful to notably less so.

With the remaining days of the GOP majority in the 109th Congress ticking down, Republican aides were less certain of passing legislation to stop the cuts.

One GOP aide said Tuesday, "While I'd say getting something done is possible, I wouldn't say it's probable."

Not all House Republican aides were pessimistic about the payment cuts' future, however, with one saying, "If I had to handicap it, I would say the odds are better than even that we can get this done."

Outside the halls of Congress, the prevailing view is that the momentum for stopping the cuts has stalled.

"I think the rationale for staying around in a lame duck has diminished dramatically" with Monday's announcement about the continuing resolution for the remaining spending bills, said John Rother, director of policy and strategy for the seniors advocacy group AARP.

Rother sees a parallel with the delay in dealing with appropriations measures.

"If you're going to put off the finances of the federal government until next year, I think pushing a [Medicare doctor payment legislation] off until next year is more likely as well," he said.

The physicians' lobby hasn't given up on eliminating the cuts, however. A week ago, the AMA ran ads in the Washington Post and USA Today, as well as in several inside-the-beltway publications, to push for such legislation in the lame duck session. So far this year, the AMA has spent $750,000 in its lobbying efforts.

And even though some House and Senate aides say the issue is still on the table, lawmakers have yet to decide on how they would pass the legislation or what it would look like.

Questions to be resolved include whether the deal would be for one or two years, and whether it would be a freeze or a modest increase. In September, the Congressional Budget Office estimated the five-year cost of a 1 percent payment increase in 2007 as $13 billion.

As part of any deal, doctors would likely be required to report data on the quality of the care they provide starting in July 2007 in order to avoid the 5 percent cut, a health care analyst said.

Possible sources of funding to pay for avoiding the cut include a $10 billion fund to boost participation by regional managed care plans in the Medicare program, and Medicare payments for oxygen therapy, according to the analyst.

So far, an agreement has yet to be worked out among the chairmen of the Senate Finance Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee.

"The biggest challenge is getting consensus from all three committee chairmen on a package, both with respect to the doctor portion and offsets," the analyst said.

John Reichard contributed to this report.

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