Hospitals Face Nearly $11B in Cuts in New Payroll Tax, SGR Bill

Congress has agreed to a new bill that would temporarily extend the payroll tax cut and the sustainable growth rate for 10 months, according to a Firedoglake report.

The $150 billion bill will also extend some unemployment insurance benefits. In total, only $50 billion of the $150 billion costs will be offset, according to the report.

Hospitals will face roughly $11 billion in cuts over 10 years. They include a $4 billion reduction in Medicaid Disproportionate Share Hospital payments and a $6.8 billion reduction in Medicare payments for hospital bad debt expenses. Currently, it appears Medicare hospital outpatient department evaluation and management services have been excluded from the deal, according to the Healthcare Association of New York State.


Other offsets in the bill include a $5 billion cut to President Barack Obama's healthcare reform law's $15 billion prevention trust fund. Additionally, Louisiana will lose $2.5 billion in enhanced Medicaid payments that were issued in the wake of Hurricane Katrina. Cuts to Medicare payments for clinical lab tests were also part of the bill.

This bill only extends these measures until Jan. 1, 2013, when a lame duck Congress will have to negotiate either another temporary fix to the SGR and other components or comprehensive permanent fixes.

Physicians faced a 27.4 percent reduction to Medicare payments if an agreement had not been reached by March 1. Peter Carmel, MD, president of the American Medical Association, said in a statement that although the House and Senate conference committee agreed to avert the temporary SGR cut, they "missed a serious opportunity to permanently replace the flawed Medicare physician payment formula…people outside of Washington question the logic of spending nearly $20 billion to postpone one cut for a higher cut next year, while increasing the cost of a permanent solution by about another $25 billion."

Related Articles on the Payroll Tax-SGR Bill:

Sen. Baucus: Permanent SGR Fix May Not Happen This Year

Hospital Associations to Congress: Don't Hurt Hospitals With SGR Fix

Bipartisan Meetings Begin on SGR Fix, Payroll Tax Cuts

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