Mary Agnes Carey, Kaiser Health News; Jackie Judd, Kaiser Family Foundation
As Congress resumed its lame duck session, the House passed a one-month extension of a Medicare physician payment “fix” that would stop scheduled cuts for another month. Meanwhile, the Senate rejected a repeal of the so-called “1099” tax reporting provision in the health law that requires that businesses file a form for any purchase of goods or services worth more than $600.
JACKIE JUDD: Good day. This is Health on the Hill. I am Jackie Judd. For the fourth time this year, Congress has passed the so-called “doc fix” to prevent a deep cut in payments made to doctors treating Medicare patients, but the 1099 fix did not win passage in Congress. Here to get behind the headlines, Mary Agnes Carey, senior correspondent for Kaiser Health News, welcome as always.
Part of the health care reform law was a requirement that businesses file with the IRS any time they make purchases of goods from vendors in excess of $600, even those who propose that element realize later it was going to be too burdensome. And yet last night the Senate failed to approve the repeal. What happened?
MARY AGNES CAREY: Well, this requirement was expected to raise about $19 billion in revenue, and so you have to make up for that revenue if you repeal the requirement. That’s where the battle comes down to. Mike Johanns, a Republican Senator from Nebraska, wanted to give the head of the Office of Management and Budget the power to go in and make reductions in unspent funds to help pay for a repeal of the 1099.
Max Baucus who is a Democrat who heads the Senate Finance Committee said we shouldn’t surrender – we being the Senate and Congress – should not surrender that kind of spending power to the head of OMB and let’s face it, we can’t agree on the offset. We’re not going to get 60 votes, so let’s just vote to repeal this thing and not worry about how to pay for it. But neither one of those amendments got enough votes to pass.
JACKIE JUDD: This is not supposed to be enacted until 2012, so Congress certainly has time to return to the issue. Do you expect that to happen?
MARY AGNES CAREY: I think they absolutely will. As you mentioned in your question, there is a lot of opposition from small business to this requirement. President Obama has said that he’s willing to have it repealed. Democrats, Republicans alike agree on the idea of repeal. The big question is how are they going to pay for it?
JACKIE JUDD: Okay, then let’s move on to the other fix, the so-called “doc fix,” which we talk about frequently on the set. And that is to make sure that doctors who treat Medicare patients would not face tomorrow, December 1st, a 23 percent reduction in reimbursement levels. Congress has now bought itself one month – what is supposed to happen in this one month to make next year different?
MARY AGNES CAREY: Well, there is interest in trying to get a longer term fix, a 12-month fix. Whether or not they will get that is unclear. Again, we just spoke about how to finance a repeal of the 1099. There will be a lot of focus on how to finance a 12-month fix of the doc fix, which is about $17 billion.
So, once again it’s the battle over the offsets. Both sides want to do this. President Obama supports the longer term fix, but whether or not they will be able to get a 12-month patch is completely unclear.
JACKIE JUDD: And this has been going on for many, many, many years.
MARY AGNES CAREY: Many years, absolutely, we have had this formula in place and every time it’s called for a cut, Congress has either stopped the cut or gone back and reversed the cut. This is a constant pressure because physicians who take Medicare patients say that if Medicare reduces their payments they will either not take new Medicare patients or they might stop taking their current ones as well. It’s a concern. The AMA is extremely concerned about this. Medicare beneficiaries are of course concerned, and so are members of Congress, so it seems to be one of those ongoing conversations.
JACKIE JUDD: Okay, as we’re talking about Medicare, tomorrow the bipartisan Deficit Reduction Commission that President Obama put together is supposed to come out tomorrow on Wednesday with some final recommendations including what to do about Medicare spending. What’s the expectation there?
MARY AGNES CAREY: Well, it’s unclear whether or not the panel will get consensus, 14 of the 18 members, whether or not they’ll actually vote for a package of ideas. The panel’s chairmen have already put out a proposal that could be changed, but that proposal includes things like setting a global budget for Medicare, asking beneficiaries to pay more for their premiums or their cost-sharing, lifting restraints on something that the independent payment advisory board that was created in the health law that’s supposed to recommend ways to change Medicare spending, there’s certain things the Board can do and cannot do.
The chairmen of the Deficit Commission said let’s lift all those constraints. There will be discussion about these and other items tomorrow. There may be some amendments, but it’s uncertain at this point whether or not they will get consensus because they’ve got to have 14 votes for that package before it can be sent to Congress for consideration.
JACKIE JUDD: Over the years Washington has seen a lot of commissions like this come and go. Is there any sense that the country may have now reached the tipping point because of the deficit and the debt as well, that something has to be done this time, or is this a commission that will simply go into the history books?
MARY AGNES CAREY: Well, the thought is that even if a complete package does not emerge, elements of these ideas could get some traction for the very point you mention, concern over the federal deficit and the debt, and how entitlement spending contributes to that, but also the counterweight here is the political factor.
In the campaigns, Republicans attacked Democrats for spending reductions they made in the health law for Medicare, and so how could Republicans go back to the Medicare issue and recommend changes after it was such a central focus in the campaigns?
Democrats as well may be a little reluctant to touch Medicare spending after voting for the health law and the changes that it makes in Medicare, so it’s complicated as well by politics as well with policy.
JACKIE JUDD: Okay. Thank you so much, Mary Agnes Carey of Kaiser Health News.
MARY AGNES CAREY: My pleasure.