Obama's $3.7 Trillion Budget Proposes 2-Year "Doc Fix"

February 14, 2011

President Obama's 2012 budget proposal would push back a steep cut in Medicare reimbursement rates for physicians for another two years, at a cost of $62 billion. Cuts in Medicare and Medicaid spending, and a push for generic drugs in federals programs, would pay for it.

President Obama's 2012 budget proposal would push back a steep cut in Medicare reimbursement rates for physicians for another two years, at a cost of $62 billion.

The president’s $3.73 trillion budget includes a host of program cuts and diminishing tax breaks that would cut the deficit, expected to reach $1.65 trillion this year, by roughly $1.1 trillion over the next decade.

The scheduled 25% cut in the Sustainable Growth Rate (SGR), the formula used to determine Medcare reimbursement rates, was set to go into effect at the end of 2011. Last year, lawmakers put off implementing the Medicare pay cut five times. The continued delays made up half of the rate-cut blocks over the past eight years, helping avoid the Medicare rate adjustments that are required under a 1997 law meant to keep the Medicare program in the black.

To pay for the latest “doc fix,” the Obama administration proposes cutting certain Medicare and Medicaid payments to doctors and hospitals.

“To offset the cost of protecting physicians’ reimbursements for two years, [Obama] will propose $62 billion in savings through changes that squeeze Medicare and Medicaid payments to hospitals and doctors and expand the use of generic drugs in federal health programs,” according to an article in the New York Times.

Some of the cuts suggested by the president's fiscal commission last year include: cutting payments to hospitals for medical education; ending Medicare payments to hospitals and other providers for unpdaid deductibles and copays owed by beneficiaries; and requiring higher savings from home health providers, according to a report in The Hill.