The Debt Ceiling Deal

Radiologists could see an additional two percent pay cut on top of double-digit Medicare reductions already slated for 2012 under the debt ceiling deal reached by the White House and congressional leaders late Sunday.

There is also more general concern about a new congressional panel to be created by the deal that would have broad authority to cut federal spending on Medicare, Medicaid and even some parts of President Barack Obama’s health care law, according to health care lobbyists and budget officials.

Under terms of the hurried deal, the 12-member joint committee would be charged with crafting proposals that trim at least $1.2 trillion in federal spending over the next decade. Those savings could be found in a number of programs, including Medicare and especially Medicaid, which the White House has signaled it would be open to.

If the panel cannot come up with enough savings, automatic cuts would go into effect. Medicaid, Social Security and veterans’ benefits would be protected, but providers could see a two percent cut in Medicare reimbursement. The White House has made it a selling point that the deal protects Medicare beneficiaries – and that any cuts would be limited to providers.

If the cuts do go into effect, they would happen on top of a 29 percent pay cut for physicians scheduled to go into effect if there isn’t a fix to Medicare’s Sustainable Growth Rate formula before the end of the year. The late November deadline puts the deficit reduction effort on a collision course with a push by physician groups to reverse the 29 percent Medicare payment cut, which would go into effect absent a congressional fix.

The deal provides a path for Obama to get a $2.2 trillion increase in the debt ceiling, enough to kick the politically contentious issue past the 2012 elections and into 2013. There would be an initial $1 trillion in expected savings from discretionary programs, and the legislation empowers the joint committee to target as much as an additional $1.5 trillion in deficit reduction.

The committee must file its recommendations by Thanksgiving and Congress is required to vote on them by Dec. 23rd. If its efforts fail, then across-the-board spending cuts would be triggered in 2013 – hitting Medicare but steering clear of Medicaid and Social Security.

ADVOCATE will continue to provide updates as they become available.

With best regards,
Kirk Reinitz, CPA
President & CEO