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Medicare reimbursements to be cut by 24% starting April 1

Congress will be racing against the clock until the payments that doctors receive in exchange for treating Medicare patients are cut significantly. If Congress fails to pass legislation by March 31, the 685,000 doctors that participate in Medicare will see their reimbursements cut by 24% starting April 1.

The cut is based on the sustainable growth rate (SGR) — a formula that was instituted as part of a 1997 deficit reduction law designed to limit federal health care spending by tying physician pay to an economic growth target. Medicare expenditures triggered an automatic 5% cut for the first time in 2002, but since then, Congress has passed 16 stop-gap measures — sometimes retroactively — to push the cuts that average about 5% a year further down the road. It passed five of these measures in 2010 alone.

Despite the impending need for an eleventh-hour legislative action, permanently ending the automatic spending cuts has bipartisan support. Physicians and medical industry groups were hoping that this would be the year when they’d see the repeal of the annual reductions based on the SGR formula. Talks looked promising in early February, when lawmakers introduced a bill that would give doctors serving Medicare patients a 0.5% reimbursement increase annually for five years. But that rare bipartisan effort came crashing down when House Republicans decided to pay for the bill — which will cost $138 billion, according to the Congressional Budget Office — by delaying Obamacare’s individual mandate for five years. With largely Republican support, the House passed a bill linking the two issues on March 14.

The Democrat-controlled Senate is unlikely to take up the bill, and the Obama administration has already said that the President will veto it if it reaches his desk. That means that starting next Monday, Congress has seven days to come up with a new bipartisan solution to keep the 24% cut from going into effect. Repealing the SGR cuts is needed to ensure the health security for elderly Americans and to support the physicians who care for them.

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