Congress enacts "Doc Fix" as part of a Last Minute Bill to avoid the Fiscal Cliff

January 4, 2013

Late in the evening New Year's Day, the House of Representatives passed a Senate Bill that avoids the fiscal cliff by making middle-class tax rates permanent and postponing automatic spending cuts for two months. As part of the deal, Congress included a Medicare "Doc Fix" necessary to avert a 26.5% cut to Medicare physician payments in 2013. The 26.5% cut was based on the the Sustainable Growth Rate ("SGR") formula that was originally enacted in 1997 to help balance the Federal budget and designed to reign in the growth of Federal health spending. While several attempts to find a permanent solution have been made, they have been unsuccessful and Congress has relied on the temporary Doc Fixes every year since 2003.

As part of the deal passed Tuesday, Congress avoided the 26.5% cut by extending 2012 fee schedule rates until December 31, 2012. The $25.1 billion cost of the one year patch was offset by reductions to other providers, namely to Hospitals, dialysis clinics, and pharmacies. Examples of Some key offsets include:

• Recouping past overpayments to Hospitals based on how the Hospitals coded services under the Medicare Severity Diagnosis Related Groups ("MS-DRGs") payment system;
• Re-pricing the cost of end-stage renal disease payments;
• Reducing payments for multiple therapy procedures performed the same day;
• Reducing the Equipment Utilization Rate for Advanced Imaging Equipment.
• Requiring competitive bidding for diabetes testing strips sold at retail pharmacies; and
• Eliminating all funding for the Medicare Improvement Fund.

Congress also extended several Medicare and Medicaid Payment policies that were set to expire December 31, 2012, including lower Medicaid payments to hospitals servicing a large number of uninsured or low-income beneficiaries ("Disproportionate Share Hospitals"), continuing the physician work index that accounts for differences in geographic resource costs, and reductions in payments for some ambulance services.

If you have questions regarding this issue or other related issues, please contact the Health Law Partners at (248) 996-8510, or visit the HLP website.

If you have questions regarding this issue or other related issues, please contact the Health Law Partners at (248) 996-8510, or visit the HLP website.