But budget watchers and congressional staffers agree that it would be a mistake to dismiss Obama's plan as irrelevant to the looming debates in Washington. Republicans likely will look at the same list as the administration when it comes to finding ways to pay for healthcare bills. Last week, top Republicans, while unveiling the outlines of their replacement bill for the president's insurance expansion, signaled they would consider some form of tax on high-cost health insurance plans, currently scheduled to start in 2018.
The latest battle over repealing the SGR could provide an early test of where the administration and congressional Republicans can find common ground. The latest patch runs out at the end of March, when physicians face a 21.2% reduction in payments if a solution isn't found.
Last year, there was a bipartisan deal in both chambers to permanently repeal and replace the payment scheme. But it ran off the rails because negotiators couldn't agree on how to pay for its 10-year price, which the Congressional Budget Office now pegs at $170 billion.
House Speaker John Boehner will need a way to pay for the bill if he wants to keep his party's conservatives in line. “It's the political reality that we've got to at least offset a significant amount of it,” said a senior GOP House staffer who's been involved in the discussions.
Sen. Orrin Hatch, chairman of the Finance Committee, threw cold water on prospects for a permanent fix when he told reporters last week he didn't anticipate holding hearings until April. That means another patch—it would be the 18th consecutive short-term “doc fix”—is the most likely outcome.
Congressional Democrats remain unwilling to consider structural changes to Medicare—the preferred GOP approach—to pay for a permanent fix.
“Until (Republicans and Democrats) can agree on what offsets are on the table, we can expect to see additional rounds of patches,” said Stephen Northrup, a former top Republican healthcare staffer who is now with the lobbying firm Rampy Northrup. “Many members and staffers are already resigned to another six- or nine-month patch in March.”
That's where Obama's budget proposal could prove useful. The plan included more than $400 billion in spending reductions on Medicare over the course of a decade. That includes more than $100 billion in savings by requiring pharmaceutical companies to pay rebates on drug payments for low-income Medicare beneficiaries.
That proposal alone would cover a large chunk of the repeal. But most policy observers say any funding plan will need to spread the financial pain more broadly as the pharmaceutical industry maintains one of the most potent lobbying presences in Washington.
Medicare payments to hospitals remain a favorite target of both parties. The president proposes saving nearly $30 billion over 10 years by reducing payments for ambulatory services performed at hospitals. That change is designed to bring those payments in line with identical services provided in physicians' offices.
In addition, Obama wants to save nearly $10 billion by increasing the use of bundled payments to post-acute-care providers. That proposal fits in with the administration's broader goal of having at least half of all Medicare spending through value-based payment models such as accountable care organizations by 2018.
Senior GOP House staff said changes to Medicare are a potential source of common ground with the Obama administration. “The president is sending us signals that there are things we can do,” one staffer said. “It could be a conversation starter.”
