By Mary Agnes Carey, Kaiser Health News
(Photo: Alex Wong)
As part of the “fiscal cliff” deal, Congress stopped a scheduled cut in Medicare payments to doctors. But hospitals will be picking up a big chunk of the tab, and they’re not happy.
The bill would require that, over the next decade, hospitals pay nearly half of the approximately $30 billion cost of stopping a 26.5 percent payment cut for Medicare physicians, scheduled to begin today. Figuring out a way to pay for this payment cut is known around Washington as the “Doc Fix.”
Some background: The 26.5 percent reduction for doctors comes from a payment formula created in a 1997 deficit reduction law. For the first few years, doctors received modest pay increases. But in 2002, doctors reacted with fury when they came in for a 4.8 percent pay cut under that plan. Every year since, Congress has staved off the scheduled cuts until now, when all those delayed cuts add up to a total 26.5 percent cut.
The new law pays for the Doc Fix by reducing hospital payments in two ways: cuts to hospitals from Medicare AND cuts to hospitals from Medicaid.
First, Medicare. The Fiscal Cliff deal would cut $10.5 billion from projected Medicare hospital payments over 10 years for inpatient or overnight care through a downward adjustment in annual base payment increases. Next, Medicaid. The Senate measure would reduce Medicaid disproportionate share payments to hospitals by an additional $4.2 billion over the next decade. These cuts are on top of those made to hospitals in 2010 as part of the Affordable Care Act.
Groups representing hospitals said the new plans for reductions will hurt their ability to care for patients.
Robbing Peter to Pay Paul? Continue reading
