Post-election, what will happen to Medicare reimbursement?

January 12th, 2015

The election is finally over! Whether you're celebrating or lamenting the results, the re-election of President Obama has ensured that the Affordable Care Act is here to stay. And while states scramble to decide whether to set up state insurance exchanges, the lame-duck Congress must now scramble to fix the so-called fiscal cliff that will take place at the beginning of the year – amounting to $700 billion in automatic tax increases and spending cuts that will take place if a deal is not reached. And in the crossfire is Medicare, with physicians facing a reimbursement cuts on top of a 27% sustainable growth rate reimbursement cut beginning on January 1^st.

The tax increases and spending cuts were created in the Budget Control Act in August 2011, when Congress agreed to raise the federal debt ceiling. Adding insult to injury, a budget sequester would also occur if an alternative budget agreement to stop the cuts cannot be reached, slapping an extra 2% in Medicare payment reductions for physicians.

This scenario would have a huge effect on physician practices. The sequester would mean receiving 98 cents for every dollar in care provided – totaling $11 billion in 2013 and $123 billion through 2021. Physicians would “very likely” stop accepting new Medicare patients, reduce employee salary and benefits, cut administrative and clinical staff, and put off new purchases.

The odds are that a temporary patch will be created to stop the 27% SGR – every year since 2003, Congress has put off SGR increases. But the budget sequester will be tougher to overcome. A quick-fix patch is expected to be passed after Congress reconvenes on November 13^th, which should push the cuts back by several months to a year. But such measures can’t keep going forever, and a still-divided Congress will not make the big decisions easily.