Obama budget makes no assumptions about Medicare sustainable growth rate cuts

April 3, 2009
James Brice

The $3.5 trillion spending plan passed by the House and Senate April 2 reflects the recent reality of applying the Medicare sustainable growth rate policy on physician fees. It anticipates that Congress will again intervene to stave off the pending 21% cut to physician fees next year and actually estimates that payments will grow by $147.1 billion from 2010 to 2014.

The $3.5 trillion spending plan passed by the House and Senate April 2 reflects the recent reality of applying the Medicare sustainable growth rate policy on physician fees. It anticipates that Congress will again intervene to stave off the pending 21% cut to physician fees next year and actually estimates that payments will grow by $147.1 billion from 2010 to 2014.

The administration's treatment of sustainable growth rate (SGR) comes as good news to the American Medical Association. The AMA has led annual lobbying efforts for each of the past seven years to persuade Congress to delay mandated cuts to the Medicare Physicians Fee Schedule. A negative update was implemented only once, with a 4.8% rate reduction in 2002.

Speaking on background, an AMA official who is familiar with legislative matters characterized the absence of the effects of SGR in the president's budget as a "big step forward toward permanent reform." The absence of cuts in the budget does not reveal the president's position on SGR, but it sets the stage for congressional action, she said. The White House press office did not respond to requests for information.

Orrin Marcella, the American College of Radiology's director of congressional affairs, said the treatment of SGR grows out of Obama's emphasis on transparency for his $3.5 trillion proposal.

"The president is not making policy. He is making a budget that reflects reality," Marcella told Diagnostic Imaging. "A policy change is up to Congress."

The "honest" budget policy reflects Democratic frustration with budgeting practices during the Bush administration, Marcella said. Many major budget items, such as the war in Iraq, were handled on an off-budget basis and had the effect of hiding budget deficits that accumulated while Republicans controlled the executive and legislative branches of federal government.

The House and Senate approved separate versions of the multitrillion-dollar spending proposal along party lines. Spending details, including those for expanded healthcare coverage for the uninsured, will be worked through reconciliation in a joint House-Senate conference committee. It was not immediately known if provisions requiring prior authorization for high-tech outpatient imaging covered by Medicare were included in either House or Senate versions.

Republicans blasted the budget legislation as a reckless expansion of government reach and indebtedness. The budget could double national debt within five years. Some sources estimate that healthcare reform could mean another $1 trillion in federal spending in the next decade.

Expenditures for expanded healthcare coverage in the current legislation have been seen by the White House as a precursor to a broader debate on comprehensive healthcare reform.

For more information from the Diagnostic Imaging and SearchMedica archives:

White House calls for imaging preauthorization in budget planUninsured minorities should gain from Obama-style healthcare reformRadiology search for place in healthcare reform puzzleNew Medicare fee schedule raises rates, limits reforms