President Obama Signs Payroll Tax-SGR Bill

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President Barack Obama officially signed the Middle Class Tax Relief and Job Creation Act of 2012 Wednesday, which will extend the Medicare physician payment rate, payroll tax cuts and unemployment benefits through Dec. 31, 2012, according to a post on the White House blog.

Due to the sustainable growth rate, physicians faced Medicare reimbursement cuts of 27.4 percent. The recently signed bill will offset the SGR costs — as well as several other Medicare extenders such as hospital outpatient hold harmless payments and outpatient therapy caps — through several provisions. Hospitals will be taking on several cuts, including the reduction of bad debt payments and rebased Medicaid Disproportionate Share Hospital payments.

Ken Perez, director of healthcare policy and senior vice president of marketing at MedeAnalytics, says although it is hard to identify precisely which spending cuts paid for the SGR fix, hospitals will be impacted negatively. Overall, the SGR patch cost $8.1 billion this year and will add $18 billion to the national deficit over the next decade.

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"It is clear that hospitals bore a majority of the healthcare-related spending cuts, so it is not an overstatement to say that the legislation generally robbed Peter to pay Paul, transferring wealth from hospitals to physicians," Mr. Perez says.

Hospitals and physicians alike called for a full repeal of the SGR earlier this year, but to no avail. Physicians will now face an estimated 35 percent payment cut from Medicare in 2013. "Group practices are telling us that this Congressional decision exacerbates an already unhealthy environment that limits their ability to plan for the future and balance their practices' fiscal health with their desire to continue to serve Medicare beneficiaries," said Susan Turney, MD, president and CEO of MGMA-ACMPE in a statement.

Mr. Perez says the lack of a permanent SGR fix could also affect the credit rating of the United States, which already saw its debt downgraded by Standard & Poor's this past August. "This latest 'kicking the can down the road' does not provide a permanent solution, and the unresolved SGR issue will continue to be integral to the calculus of deficit reduction and therefore a factor in the appraisal of our nation's creditworthiness by the credit rating agencies," Mr. Perez says.

More Articles on the Sustainable Growth Rate:

The 2012 Payroll Tax-SGR Bill: What It Means for Hospitals

Which States, Specialties Contributed Most to the SGR Deficit?

CBO: Federal Healthcare Expenses Set to Double Over Next Decade

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