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One-Year ‘Doc Fix’ Included in Fiscal Cliff Package

The fiscal cliff legislation worked out Monday contains a one-year payment patch for physicians who treat Medicare patients, paid for by health care offsets, according to a Senate Democratic aide.

The deal (HR 8), negotiated by Vice President Joseph R. Biden Jr. and Senate Republican Leader Mitch McConnell of Kentucky, would block scheduled 27 percent payment cuts to Medicare physicians that start Jan. 1, and keep rates frozen at current levels for one year.

For the past decade, Congress has dealt with scheduled payment cuts to Medicare physicians by enacting a series of short-term patches known as a “doc fix.” In recent years, lawmakers have insisted the cost of the patch be offset through other spending cuts, and this one would be no different.

The senior Democratic aide said that the one-year patch would be paid for by offsets related to health care, but did not specify which programs would be affected. Provider and hospital groups and hospitals have been lobbying Congress in recent weeks to protect their members from any cuts to help pay for the payment patch.

In recent years, lawmakers have insisted the cost of a “doc fix” — the short-term patch intended to keep scheduled payment cuts from kicking in — be offset through other spending cuts.

Although lawmakers have yet to specify what provisions would be used, a number of familiar Medicare-related offsets could be included. Lobbyists said Monday that lawmakers were continuing to negotiate which provisions would be used. The cost for keeping doctors’ reimbursement rates steady for one year is estimated to be about $25 billion.

According to several lobbyists, one likely offset candidate is paying for “evaluation and management” visits in hospital outpatient departments at the same rate as for those visits when performed in doctors’ offices. Hospital lobby groups have been lobbying lawmakers in opposition to that item, which was recommended by the Medicare Payment Advisory Commission (MedPAC).

Lobbyists said lawmakers may also use another MedPAC recommendation to not update payment rates for outpatient dialysis services used to treat patients with end-stage renal disease. A new payment system for those services was launched in 2011.

Another offset being discussed is reducing payments to hospitals that treat large numbers of patients without insurance and those who are on Medicaid. Under the 2010 health care law (PL 111-148, PL 111-152), payments to those “disproportionate-share hospitals” will be reduced by $18 billion between 2014 and 2020.

The most recent doc fix (PL 112-96) extended the payment cuts to those hospitals by one year, and they could be extended even further in the latest deal.

One lobbyist said another possible offset could be cutting Medicare payments for home health care services.

Republicans had been pushing for some offsets from cutting spending and finding savings in the health care overhaul, but Democrats rejected that, according to lobbyists.

Along with the doc fix, lawmakers could include some other expiring Medicare payment provisions, which could bring the total cost of Medicare-related items to about $28 billion over 10 years.

John Reichard, Paul M. Krawzak and Niels Lesniewski contributed to this report.

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