At issue is the is Medicare sustainable growth rate (SGR) formula. The formula would mandate automatic cuts to Medicare reimbursement rates. For years, Congress has used short term “patches” to prevent the payment cuts mandated by the SGR. The patching of the SGR has turned into a lobbying boondoggle.
If the formula is not fixed, next year, doctors would see a 21 percent cut in Medicare reimbursements. Essentially, no one in Washington expects the SGR to ever be allowed to fully go into effect, but the CBO's long term budget projects must assume that it will.
Permanently fixing the SGR formula is a top priority of the American Medical Association (AMA). Harry Reid and the White House plans to introduce a $245 billion bill to do just that. The fact that the SGR fix is not paid for does not sit well with some conservative Democratic senators. Both Sen. Conrad (D-ND) and Sen Bayh (D-IN) have expressed their opposition to an unpaid SGR fix:
"It needs to be done but I couldn't vote for something that is going to raise the deficit by $245 billion, not at a time when we are already hemorrhaging red ink," Bayh said. "I am for the fix but I don't think we should blow the roof off the deficit -- not at a time when we are already running record deficits."Failure to fix the SGR could cost Obama's health care efforts the support of the AMA. Passing the fix will test Majority Leader Harry Reid's and President Obama's abilities to twist the arms of conservative Democratic senators into voting for cloture on a bill they object to. (Something Reid is pretending is impossible to do for a health care reform bill that includes a public option.)
*Note if the money for $245 billion SGR fix was instead used to improve affordability in the current health care reform bills, it would be more than enough money to actually provide affordable universal health insurance for all Americans.
Update - Politico is reporting that Reid maybe working on an agreement with some Republicans to pass the SGR fix.