A proposed congressional “doc fix” deal being discussed last Friday looked as if it would include a permanent repeal of Medicare's sustainable growth-rate formula and a two-year extension of the Children's Health Insurance Program with a total cost exceeding $200 billion.
Only a portion of the cost will be offset by spending cuts, said four lobbyists familiar with the negotiations. Funding a permanent fix has stymied Congress during past attempts to move beyond a temporary patch for the issue, as was done last year, and could still be a stumbling block that unravels this attempt.
“It's as close as we've ever been,” said a veteran lobbyist speaking on background. “This is the best shot that they're ever going to have.”
Details are still subject to negotiations between House Speaker John Boehner and Minority Leader Nancy Pelosi and therefore could change. The Senate has not been part of the negotiations, so an agreement in the House could break down if Senate leaders don't sign off on it.
Only about $70 billion is expected to be offset by spending cuts. Those spending reductions are anticipated to be split fairly evenly between cuts to providers and changes to benefits. The latter is expected to include increased cost-sharing for wealthier Medicare beneficiaries. The discussion about spending reductions was still being resolved late last Friday. The exact mix of provider cuts and benefit reductions is likely to change as the deal progresses through the legislative process.
The lack of corresponding spending reductions is certain to be controversial within the Republican caucus. The conservative advocacy group Heritage Action for America has issued a statement blasting a doc fix that's not entirely paid for with spending reductions.
“Any permanent solution must be financed with permanent Medicare savings, period,” said spokesman Dan Holler. “Americans didn't hand Republicans a historic House majority to engage in more deficit spending and budget gimmickry.”
That means the legislative dynamics in the weeks to come will be intricate and possibly explosive. Boehner has weathered repeated insurrections within his caucus in recent years when he's sought to negotiate bipartisan deals.
“It's going to be a hard pill for many Republicans to swallow,” said Dean Rosen, a partner with the lobbying firm Mehlman Castagnetti Rosen Bingel & Thomas and a former Republican congressional staffer.
Congress must reach a deal by March 31 to avert a 21.2% reduction in Medicare payments to doctors. How the 218 votes needed for passage in the House can be cobbled together for the emerging deal remains a very dicey proposition.
“That's the $150 billion question,” said Stephen Northrup, a partner with the RampyNorthrup lobbying firm and a former GOP congressional staffer. “Where do Republicans come down? Where do Democrats come down?”
Most hardened healthcare policy watchers would still likely place their bets on another temporary patch, which would be the 18th consecutive short-term fix to the payment formula.
Healthcare interests have been aligned in seeking a permanent SGR repeal. But any cuts to help pay for it will be scrutinized by hospitals and other interested parties.
“We look forward to what we understand is sort of cooking between the leaders in the House to see what they're going to put on the table,” said Chip Kahn, CEO of the Federation of American Hospitals, which represents investor-owned facilities. “It's an artificial fiscal problem created by Congress that desperately needs to be cured.”
