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The Doc Fix

The Payroll Tax Cut agreement reached in Congress prevents doctors who treat Medicare patients from taking a nearly 30 percent pay cut, which would have harmed physicians and jeopardized seniors’ access to the doctor they know and trust

The agreement reached in Congress yesterday is an important step that will prevent a tax hike on 160 million hardworking Americans who are still recovering from the worst economic downturn since the Great Depression, and continue essential support for millions of unemployed Americans struggling to find jobs. The agreement is also important because it prevents doctors who treat Medicare patients from taking a nearly 30 percent pay cut.  That kind of cut would harm physicians and jeopardize seniors’ access to the doctor they know and trust.

Some have argued that this legislation hurts the Affordable Care Act. This claim is false. Most of the policies in this bill that help prevent doctors from taking a pay cut are in the President’s budget.  Others were the product of a tough negotiation.  And none harm the implementation of health insurance premium tax credits as did the House Republican plan from December.

Let’s look more closely at what is actually in the agreement:

  • Medicare Bad Debt Payments. Right now, Medicare pays hospitals and other providers for most of the bad debt that results when beneficiaries do not pay what they owe.The Administration first proposed modestly reducing the amount Medicare will pay for bad debt in our recommendations to the Joint Select Committee on Deficit Reduction in September.  The National Commission on Fiscal Responsibility and Reform (Bowles-Simpson Commission) also recommended reducing these payments. And the final agreement includes an even more modest reduction than the Administration’s proposal. 
  • Medicaid Disproportionate Share Hospital Payments. These payments go to hospitals that care for many people without health insurance. Thankfully, health reform will ensure more people have health insurance and decrease the need for these payments. The final agreement implements a proposal to reduce these payments in 2021, consistent with the Administration’s 2012 and 2013 budget requests.
  • Prevention Fund. In recognition of the importance of cutting spending, the Administration previously proposed reductions in the Prevention and Public Health Fund.  The reduction in the final agreement is more substantial than our proposal.  But the Prevention and Public Health Fund will still invest $13.5 billion from 2012-2022 to help improve health outcomes and address important issues like obesity, tobacco use, and immunization. In contrast, the Republican House voted to repeal the Prevention Fund entirely last year – a bill the President’s senior advisors recommended he veto. 
  • Disaster-recovery FMAP fix. The bill fixes a technical error in an Affordable Care Act provision intended to provide short-term assistance to States recovering from a major disaster, preventing $2.5 billion in extra spending.

All in all, this agreement ensures that physicians receive reliable payments for the care they provide and that Medicare beneficiaries have access to care – and does so in a fiscally responsible way. We’ll continue to implement the Affordable Care Act, crack down on the worst insurance company abuses and prepare for 2014 when Americans will have access to the same kinds of health care choices as members of Congress. And, the agreement we reached prevents a tax increase from hitting millions of working Americans and prevents the end of support for millions looking for a job. Together, these provisions also help our economic recovery, and we hope they are just the first step in the many we will take to boost job creation and construct an economy built to last.