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Tag Archive | "SGR"

Medicare Trustees Release 2011 Report

On May 13, the Medicare Board of Trustees released its 2011 Report on the financial status of Medicare. The Board noted that the financial picture may be understated in the report because certain assumptions are not likely to be carried out. For example, the calculation of Medicare’s solvency is based on the assumption that Congress will not intercede to prevent the Medicare physician payment cuts scheduled to go into effect on January 1, 2012.

The Medicare Trustees issued their sixth “funding warning,” meaning that for Medicare is projected to draw more than 45 percent of its funding from general government revenue. Under the Medicare Modernization Act (MMA), as a result of the warning, the President is required to submit to Congress a legislative proposal to reduce Medicare. However, the White House has not historically issued such a proposal.

The report indicated that the reforms included in the Affordable Care Act (ACA) extend Medicare’s solvency by eight years. The Trustees project that the Medicare Trust Fund will be solvent until 2024.

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Capital Thinking Podcast

Given recent resignations and a death, House Speaker Nancy Pelosi needs 217 votes to pass the Senate bill. The whip count in the House remains close.  Congressman Joseph Cao, the only Republican who voted in favor of the House health care reform legislation, is not expected to lend his support to passage of the Senate bill. Representative Bart Stupak and other anti-abortion Democrats, who authored the language in the House package to prohibit individuals from using federal subsidies to purchase plans in the exchange that cover elective abortions, have been vocal that they will not support the Senate package. Department of Health and Human Services Secretary Kathleen Sebelius has suggested that the White House may strike a deal with the Congressman to address his concerns in a separate bill in exchange for support on the Senate bill. Although President Obama may be ready to move health care reform forward without Republican support, he must ensure that Congressional Leaders can rally Democrats.

White House Press Secretary Robert Gibbs said that the President wants the House to pass the Senate bill before March 18.  House Energy and Commerce Committee Chairman Henry Waxman, however, suggested that Congress could finish health care reform within the next two months. House and Senate Leadership had hoped to send a reconciliation bill to the Congressional Budget Office to be scored.

Meanwhile, last week, the Senate turned to a jobs package and tax extenders legislation, both which contain short-term fixes or extensions of expiring Medicare provisions. The Senate passed and the President signed into law H.R. 4691, the “Temporary Extension Act of 2010.” The legislation includes an extension of the Medicare physician fee fix as well as an extension of the therapy caps exceptions process through March 31, 2010.

When the Senate convenes today, it will resume consideration of the tax extenders package. The legislation is expected to pass this week with the Baucus substitute amendment, which extends the physician fee fix through the end of the year. The substitute amendment also includes a number of Medicare extenders that were included in the Senate-passed “Patient Protection and Affordable Care Act.”

Representative Charlie Rangel took a temporary leave of absence as the Chairman of House Ways and Means Committee as the House Ethics Committee ruled that he broke ethics rules by accepting trips to the Caribbean. An investigation into claims of tax evasion and failure to report income from rental properties continue.  Michigan Congressman Sandy Levin will serve as Acting Chairman.

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Tick Tock – Has Time Run Out for Health Reform?

During his State of the Union address, the President did not give any insight into the best path forward for moving comprehensive health care reform. Congress continues to mull over how to pass legislation, and reform advocates are holding out hope that Members can refocus and revive the debate. Meanwhile, it has become clear that creation of new jobs will be the President’s number one priority in 2010.

The New York Times reports that Democrats are considering splitting up the bill and moving smaller pieces separately but Politicoconfirms that option may not be a simple and expeditious process.

The Washington Post reports that Democrats are still contemplating on how to proceed but lawmakers remain steadfast in their commitment to passing legislation and maintain that reconciliation is still on the table.  We anticipate that Democratic leaders will continue to caucus over the next couple of weeks to work on developing a sustainable path forward.

In other health news, while the Democrats still maintain a filibuster proof majority before Republican Senator-elect Scott Brown is seated, the Senate managed to pass a resolution that increases the debt ceiling to $14.3 trillion, which greases the wheels for a potential five-year Medicare physician payment fix that would be exempt from the pay-as-you-go rules.  Congress is still required to pass legislation to stop the 21 percent cuts from going through on March 1, 2010.

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Capital Thinking Podcast

Health Care Reform Regulations

This week, the Health Resources and Services Administration will publish notice to establish a rulemaking committee. The Patient Protection and Affordable Care Act requires the Administration to establish a methodology and criteria for designation of medically underserved populations and primary care health professions shortage areas.  The rulemaking committee will work to reach consensus among technical experts and stakeholders on an interim final rule on the methodology and criteria.

The interim final rules for group health plans and health insurance issuers related to dependent coverage of children to age 26 is currently under review at the Office of Management and Budget. The interim final rule is expected to be one of several forthcoming rules required under the Patient Protection and Affordable Care Act.

House Appropriations Chairman Announces Retirement

Last week, House Appropriations Committee Chairman Dave Obey announced his retirement.  He served as the Chairman of the full Committee and the Labor-Health and Human Services Subcommittee. Rep. Norm Dicks of Washington is expected to serve as Chairman of the full committee. Rep. Nita Lowey of New York, the second ranking Democrat on the Labor-HHS Subcommittee, or Rep. Rosa DeLauro of Connecticut, Chairwoman of the Agriculture Subcommittee, will likely serve as the Labor-HHS Subcommittee Chairwoman upon Chairman Obey’s retirement.

Medicare Physician Fee Fix 

Congress has three work weeks prior to adjourning for Memorial Day recess. With the physician fee fix set to expire on May 31, the House is posed to move an extenders bill that would include an extension of the Medicare physician fee fix. Majority Leader Steny Hoyer stated that the House would act within the next two weeks. If the cost of the extenders package is not offset, we expect that the Senate will not be able to move the legislation. In the midst of the financial reform debate, several Senators have been working on an extenders package, which would also prevent the drastic Medicare physician payment cuts from going into effect.

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Rep. Allyson Schwartz Proposal to Repeal SGR

Rep. Allyson Schwartz (D-PA) has proposed to repeal the SGR and freeze the current Medicare physician payment rates through 2012. She proposes to provide primary care physicians with a 2.5 percent annual rate increase and specialists with a 0.5 percent increase from 2013-2016. Her proposal calls on CMS to test and evaluate physician payment models and identify at least four models from which physicians could select to be paid beginning in 2016. If physicians elected to remain in the fee-for-service system, reimbursement rates would decrease annually to encourage providers to move away from the FFS system.

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Key Dates for Joint Committee on Deficit Reduction

On August 2, President Obama signed into law the Budget Control Act of 2011, which authorizes an increase in the debt ceiling, caps spending, and provides a process by which an additional $1.2 trillion in cuts will be made.

The law authorizes a Joint Committee of Congress that is required to draft legislation to reduce the deficit by at least $1.2 trillion.  If Congress does not enact such legislation before December 23, 2011, across the board spending cuts would be triggered.  The timeframe by which Congress is required to pass this deficit reduction legislation is short:

  • August 16, 2011 – Members of the Joint Committee on Deficit Reduction Appointed
  • September 16, 2011 – The Joint Committee Meetings Begin
  • October 14, 2011 – House and Senate Committees may submit recommendations for deficit reduction to the Joint Committee
  • November 23, 2011 – The Joint Committee votes on recommendations
  • December 23, 2011 – The House and Senate must vote up or down without amendment on the deficit reduction legislation

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Gang of Six Presents Deficit Reduction Plan to Senate

This morning, the Gang of Six, which, again, includes Sen. Tom Coburn (R-OK) presented its deficit reduction plan to the Senate. According to Sen. Coburn, the deal gaining momentum in the Senate includes $116 billion in Medicare and Medicaid cuts, although the committees of jurisdiction would have to shape the specifics.  He also reported that the proposal fully pays for a SGR fix “with no gimmicks.”  Of note, the plan proposes to:

  •  Adopt statutory discretionary spending caps through 2015
  • Repeal the CLASS Act
  • Require the Senate Finance Committee to report legislation within 6 months that would permanently reform or replace the Medicare SGR formula and fully offset the cost with health savings; find an additional “$202 billion/$85 billion” /10 years in health savings; and maintain the essential health services that the poor and elderly rely upon
  • Require the Senate Health, Education, Labor and Pensions (HELP) Committee to report legislation within 6 months that would find an additional $70 billion/10 years in savings
  • Require the Senate Judiciary Committee to report legislation within 6 months that would advance medical malpractice reform
  • Require the Senate Finance Committee to report tax reform within 6 months that would include reforming – not eliminating tax expenditures for health
  • Require the Budget Committee to report legislation within 6 months that would: extend discretionary caps and enforcement mechanisms through 2021; ensure Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 has not stabilized; review total federal health care spending starting in 2020 with a goal of holding growth the GDP + 1% per beneficiary and require action by Congress and the President if exceeded; achieve program integrity savings of $26 billion in entitlement programs to curb fraud, abuse, and other wasteful spending government-wide; and create a working group to provide updated budget concepts for CBO and OMB
  • Provide that if any Committee fails to report entitlement program savings, the Senate would considered on an expedited basis across the board cuts to programs in the Committee’s jurisdiction

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Gang of Six Presents Deficit Reduction Plan to Senate

This morning, the Gang of Six, which, again, includes Sen. Tom Coburn (R-OK) presented its deficit reduction plan to the Senate. According to Sen. Coburn, the deal gaining momentum in the Senate includes $116 billion in Medicare and Medicaid cuts, although the committees of jurisdiction would have to shape the specifics.  He also reported that the proposal fully pays for a SGR fix “with no gimmicks.”  Of note, the plan proposes to:

  •  Adopt statutory discretionary spending caps through 2015
  • Repeal the CLASS Act
  • Require the Senate Finance Committee to report legislation within 6 months that would permanently reform or replace the Medicare SGR formula and fully offset the cost with health savings; find an additional “$202 billion/$85 billion” /10 years in health savings; and maintain the essential health services that the poor and elderly rely upon
  • Require the Senate Health, Education, Labor and Pensions (HELP) Committee to report legislation within 6 months that would find an additional $70 billion/10 years in savings
  • Require the Senate Judiciary Committee to report legislation within 6 months that would advance medical malpractice reform
  • Require the Senate Finance Committee to report tax reform within 6 months that would include reforming – not eliminating tax expenditures for health
  • Require the Budget Committee to report legislation within 6 months that would: extend discretionary caps and enforcement mechanisms through 2021; ensure Congressional action to reduce the deficit if the debt-to-GDP ratio after 2015 has not stabilized; review total federal health care spending starting in 2020 with a goal of holding growth the GDP + 1% per beneficiary and require action by Congress and the President if exceeded; achieve program integrity savings of $26 billion in entitlement programs to curb fraud, abuse, and other wasteful spending government-wide; and create a working group to provide updated budget concepts for CBO and OMB
  • Provide that if any Committee fails to report entitlement program savings, the Senate would considered on an expedited basis across the board cuts to programs in the Committee’s jurisdiction

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Lieberman/Coburn Bipartisan Plan to Save Medicare and Reduce Debt

On June 28, 2011, Sen. Joe Lieberman (I-CT) and Sen. Tom Coburn (R-OK) presented a proposal– the Lieberman/Coburn Bipartisan Plan to Save Medicare and Reduce Debt – that would reform Medicare in order to save at least $500 billion over 10 years. The reforms include:

• Eliminating the variation in beneficiaries’ deductibles depending on the services provided and, instead, establishing an annual deductible of $550 for both Medicare Part A and Part B services;

• Establishing an “out-of-pocket maximum” of $7,500 for Medicare beneficiaries with higher income Americans having a higher out-of-pocket maximum;

• Increasing beneficiary cost-sharing in Medigap by requiring the enrollee to pay the first $550 in cost-sharing and limiting the coverage to half of the remaining coinsurance up to $7,500 of the new out-of-pocket maximum;

• Increasing the Medicare eligibility age to 67 by 2025;

• Accelerating the implementation of the productivity adjustments and rebasing for home health payments;

• Phasing out the Medicare payments for bad hospital debt;

• Requiring higher income Americans to pay more for Medicare Part B services;

• Increasing the Medicare Part B premium until enrollees premium level reaches a minimum of 35 percent of the program’s costs in 2019; and

• Requiring individuals 65 years of age and older who are making more than $150,000 annually ($300,000 for couples) to pay the full premium costs for their Medicare Part D coverage.

The plan would include provisions focused on preventing fraud, waste, and abuse from the “Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars (FAST) Act” (S.1251), which was introduced by Sen. Tom Carper (D-DE) and Sen. Coburn. The Senators propose to use the cost savings generated from the above changes to pay for a three-year Medicare physician fee fix.

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Election Analysis: What It Means for Health Care Reform

After months of debate and considerable political maneuvering, President Barack Obama signed the Patient Protection and Affordable Care Act (H.R. 3590/P. L. 111-148) into law on March 23, 2010. On March 30, 2010, the President signed into law the Health Care and Education Reconciliation Act of 2010 (H.R. 4872/P. L. 111-152), which makes select changes to H.R. 3590.

Together, these laws, known as the Affordable Care Act (ACA), are designed to expand health insurance coverage to 32 million Americans who are currently uninsured, while reining in rapidly-growing health care costs.  Health care spending is the fastest growing line item in the Federal budget. Health care premiums have doubled in the last decade and have been an increasing burden to employers and employees, as well as State and local governments.

During the 112th Congress, Members will focus their attention on the implementation of the new law. The Republican gains, expanding the bloc of conservative Republicans, resulting in the control of the House and narrower margins in the Senate will bring about a focus on repealing or modifying the Affordable Care Act.

Other forces will be at play, beyond the political makeup of Congress, that may impact the trajectory of health care reform implementation. For example, in a Florida U.S. District Court, a judge allowed a lawsuit to challenge parts of the new health care reform law brought by 20 states, the National Federation of Independent Business, and two private citizens to move forward. The plaintiffs argue that the Affordable Care Act’s mandate that individuals purchase health care insurance and the Medicaid expansion violate the Commerce Clause of the Constitution. A summary judgment hearing where both the plaintiffs and defendants will have the opportunity to argue the merits of their case is scheduled for December 16. The lawsuit is likely to be heard by the Supreme Court in the next two years. A successful challenge would be a victory for Republicans and could result in major restructuring of the law.

In addition, Republicans are expected to win 6-8 governors’ races, resulting in a majority of state executive offices being held by Republicans. Control of these offices will impact funding priorities and health care reform implementation.

While there are many factors at play, the core provisions of health care reform, namely the establishment of state insurance exchanges and premium subsidies, are likely to remain intact in the law. In addition, given the enormous fiscal pressures, many of the Centers for Medicare and Medicaid Services’ (CMS) cost-cutting initiatives are likely to move forward, despite attempts to modify or repeal the reform law. Other provisions of the law, such as the creation of the Independent Payment Advisory Board (IPAB), are more likely candidates for repeal.  Regardless of the final outcome of the elections, we expect the battles regarding the health care reform law to continue up to and through the 2012 elections.

Committees of Jurisdiction

House Ways and Means Committee

Current Chairman Sandy Levin (D-MI) is expected to retain the top Democratic post on the Committee, serving as the Ranking Member of the full Committee in the 112th Congress. Ranking Member Dave Camp (R-MI) will assume the Chairmanship. Rep. Pete Stark (D-CA) will serve as Ranking Member of the Health Subcommittee. Rep. Wally Herger (R-CA) is in line to serve as the Subcommittee Chairman; however, Rep. Charles Boustany (R-LA) may contend for the position.

House Energy and Commerce Committee

Ranking Member Joe Barton (R-TX) is term limited according to GOP rules. Although he petitioned the Steering Committee to clarify whether the Republican Party’s six-year term limit is applicable to time served in the minority, it is unlikely that he will serve as Chairman. Instead, Rep. Fred Upton (R-MI), a moderate, is expected to rise to hold the top seat on the Committee. Current Chairman Henry Waxman (D-CA) will serve as the full Committee Ranking Member.  Health Subcommittee leadership will not change. Rep. Frank Pallone (D-NJ) will retain the top Democratic seat and Rep. John Shimkus (R-IL) will serve as the Chairman of the Subcommittee. Rep. Upton has signaled that he will seek to repeal the health care reform law and prioritize passage of legislation that would permanently prevent federal funds from being used for abortions. In addition to continued oversight of health care reform, the Committee will also consider Food and Drug Administration (FDA) user fee and reform legislation.

Senate Finance Committee

Sen. Max Baucus (D-MT) will retain his position as Chairman of the Committee.  However, leadership changes are expected on the Republican side of the aisle.  Sen. Orrin Hatch (R-UT) will serve as Ranking Member while current Ranking Member Chuck Grassley (R-IA) will transition to the Judiciary Committee to be the top Republican.  In addition to monitoring health care reform implementation, Senate Finance Committee Republicans will continue to call for a hearing with the Centers for Medicare and Medicaid Services (CMS) Administrator Donald Berwick, who was sworn in on July 13.  Dr. Donald Berwick is a pediatrician and professor at Harvard University and the founder the Institute for Healthcare Improvement.  He launched the“100,000 Lives” campaign to reduce the number of deaths attributable to medical errors in hospitals.  He previously served as Vice Chair of the U.S. Preventive Task Force, member of the Board of Trustees of the American Hospital Association, Chair of the National Advisory Council of AHRQ.  President Obama appointed Dr. Berwick during a recess in the middle of a session, so Dr. Berwick’s appointment will expire at the end of the first session of the 112th Congress.

Senate Health, Education, Labor and Pensions (HELP) Committee

The leadership of the HELP Committee will remain unchanged. Sen. Tom Harkin (D-IA), who has served as Chairman since the death of Sen. Ted Kennedy (D-MA) in August, will remain Chairman.  Sen. Michael Enzi (R-WY) will continue to serve as the Ranking Member of the Committee. Chairman Harkin recently established a health care investigations staff team, signaling his interest in more actively overseeing FDA policies.

House Ways and Means Committee

Current Chairman Sandy Levin (D-MI) is expected to retain the top Democratic post on the Committee, serving as the Ranking Member of the full Committee in the 112th Congress.  Ranking Member Dave Camp (R-MI) will assume the Chairmanship.  Rep. Pete Stark (D-CA) will serve as Ranking Member of the Health Subcommittee.  Rep. Wally Herger (R-CA) is in line to serve as the Subcommittee Chairman; however, Rep. Charles Boustany (R-LA) may contend for the position.

House Energy and Commerce Committee

Ranking Member Joe Barton (R-TX) is term limited according to GOP rules.  Although he petitioned the Steering Committee to clarify whether the Republican Party’s six-year term limit is applicable to time served in the minority, it is unlikely that he will serve as Chairman.  Instead, Rep. Fred Upton (R-MI), a moderate, is expected to rise to hold the top seat on the Committee.  Current Chairman Henry Waxman (D-CA) will serve as the full Committee Ranking Member.  Health Subcommittee leadership will not change.  Rep. Frank Pallone (D-NJ) will retain the top Democratic seat and Rep. John Shimkus (R-IL) will serve as the Chairman of the Subcommittee.  Rep. Upton has signaled that he will seek to repeal the health care reform law and prioritize passage of legislation that would permanently prevent federal funds from being used for abortions. In addition to continued oversight of health care reform, the Committee will also consider Food and Drug Administration (FDA) user fee and reform legislation.

Major Issues Likely to Be Addressed in 112th Congress

Health Care Reform Implementation. Prior to the election, House Republican leaders, including Minority Leader John Boehner (R-OH) and Minority Whip Eric Cantor (R-VA), announced their conservative agenda should they win enough seats in the mid-term elections to regain the majority in the House.  “A Pledge to America” proposes “to advance policies that promote greater liberty, wider opportunity, a robust defense, and national economic prosperity.” The agenda offers a plan to repeal and replace the health care reform law with “common-sense solutions focused on lowering costs and protecting American jobs.” Specifically, the Republicans plan to enact medical liability reform, allow purchase of health insurance across state lines, expand tax-free Health Savings Accounts (HSAs), ensure access for patients with pre-existing conditions, expand state high-risk pools and reinsurance programs, reduce cost of coverage, and permanently prohibit taxpayer-funded abortions.

Although the Republicans were not able to regain a majority in the Senate, the new House Republican Majority is likely to pass legislation to repeal or modify the Affordable Care Act.  Republicans have acknowledged that fully repealing the health care reform law is unlikely as long as President Obama is in office and Republicans do not have veto-proof majorities in the House and Senate. Furthermore, a Kaiser Family Foundation poll found that only 31 percent of registered voters favor full repeal of the law, making such a move politically unpopular.

While the Senate is not expected to consider legislation to fully repeal the health care reform law, House action will serve to outline the problems with the health care reform law and position the Republicans to articulate market-based solutions. The Republicans will use the next two years to relay to the American public through Congressional hearings and legislative activity that in order for changes to be enacted to the Affordable Care Act, a Republican president must be elected in 2012.

According to a Congressional Budget Office (CBO) analysis, Congress must appropriate more than $115 billion in 2010-2019 for the Internal Revenue Service (IRS) and Department of Health and Human Services (HHS) administrative costs associated with implementation as well as explicit authorizations of discretionary funding.  Republicans will certainly use the appropriations process to try to slow implementation of reform and to continue the debate about health care reform and its merits.

Health Care Reform Technical Corrections. A legislative package to correct provisions of the Affordable Care Act is expected to be introduced in the 112th Congress. Although House Republicans will not be successful in repealing health care reform in its entirety, Republicans in both the House and Senate may be able to modify provisions for which popular support could be garnered:

1099 Reporting Requirement. One provision that may be included in such a legislative package would repeal or modify the requirement that all businesses issue Form 1099 to vendors from which they purchase $600 or more of goods annually and file the information report with the IRS. The requirement is effective for payments made after December 31, 2011. The requirement was included in health care reform as a revenue raising provision that will generate $17.1 billion over 10 years. Congress considered proposals during this session to either repeal or modify the requirement. Republicans are expected to focus on this requirement as a way in which the Affordable Care Act burdens small businesses.

Independent Payment Advisory Board. The 15-member board will make recommendations to Congress to reduce excess Medicare cost growth and improve quality of care for Medicare beneficiaries. If Medicare costs are projected to be unsustainable in any given year, the Board’s recommendations will take effect unless Congress passes an alternative measure that achieves the same level of savings. Republicans have proposed eliminating the authority for the Board. Liberal House Ways and Means Committee Health Subcommittee Chairman Pete Stark (D-CA) has agreed that it is a “dangerous provision” and has pledged “to work tirelessly to mitigate the damage that will be caused by IPAB.”

Patient-Centered Outcomes Research Institute. The Affordable Care Act requires the establishment of a private, non-profit institute to identify national priorities and conduct comparative effectiveness research. Republicans have decried that such research will result in government refusal to provide coverage of more costly treatment options.

Community Living Assistance Services and Support (CLASS) Program. The law authorizes the establishment of a long-term disability insurance program for adults who have at least two functional dependencies. After a five-year vesting period, the program will provide those insured under the program with a cash benefit to purchase nonmedical services, such as home modifications, assistive technology, accessible transportation, homemaker services, respite care, personal assistance services, home care aides, and nursing support. Republican Senators have introduced legislation to repeal the program and moderate Democrats voiced opposition to the program during the health care reform debate. Senate Finance Committee Chairman Max Baucus (D-MT) has indicated that he is “no fan of the CLASS Act.”

Prevention and Public Health Fund.  The law authorizes a prevention and public health investment fund to provide an expanded and sustained national investment in prevention and public health programs. Republicans have called the fund a $2 billion-per-year slush fund that supports local government projects such as building jungle gyms. Earlier this year, Senate Republicans unsuccessfully tried to use the rollback of the prevention and public health fund to offset the cost of repealing the 1099 reporting requirement.

Medicare Physician Payment “Fix.” Earlier this year, Congress passed the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010,” which extended the Medicare physician fee fix through November 30, 2010. Without further Congressional action, physician payments will be cut by 23 percent beginning on December 1 and reduced by an additional 6.1 percent beginning January 1, 2011. The American Medical Association (AMA) has called for Congress to extend the fix for an additional 13 months through 2011. If Congress elects to move a short-term patch, Members will be forced to act again in the 112th Congress.

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