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Obama's FY12 budget includes money for Medicare doctor payments

President Barack Obama has released a fiscal year 2012 budget proposal that includes funding to stabilize Medicare physician payments.

According to Health and Human Services Secretary Kathleen Sebelius, the Obama administration worked in December with Congress to offset the cost of legislation preventing an imminent decrease in physician payments due to the Medicare Sustainable Growth Rate (SGR) formula.

Dec. 15, Obama signed H.R. 4994, the Medicare and Medicaid Extenders Act of 2010 into law that will delay a 25 percent Medicare physician pay cut until Dec. 31 of this year. Some political experts and many stakeholders are speculative Congress will be able to solve the problem this year.

[See more on the one-year delay of a Medicare doc pay cut.]

"The budget goes further and proposes to continue the current level of payment, and offset the increase above current law for the next two years with specific savings," Sebelius told members of the Senate Finance Committee. "Beyond the next two years, I am determined to work with you to put in place a long-term plan to reform physician payment rates in a fiscally responsible way, and to craft a reimbursement system that gives physicians incentives to improve quality and efficiency, while providing predictable payments for care furnished to Medicare beneficiaries."

Obama's $3.7 trillion plan includes $891.6 billion for HHS.

"For every program we invest in, we know we need to cut somewhere else," Sebelius said. "So in developing this budget, we took a magnifying glass to every program in our department and made tough choices. When we found waste, we cut it. When we found duplication, we eliminated it. When programs weren't working well enough, we reorganized and streamlined them to put a new focus on results. When they weren't working at all, we ended them. In some cases, we cut programs we wouldn't in better fiscal times."

"My discretionary budget is slightly below the 2010 level," she said.

Sen. Charles Grassley (R-Iowa), senior member of the Senate Budget Committee and the Finance Committee, wasn't pleased with the President's proposal.

"The President said families have to live within their budgets, but his proposal makes a mockery of that statement," he said. "Over 10 years, the debt balloons from $14 trillion today to more than $26 trillion. On any measure of debt, his budget makes things worse, not better."

Rich Umbdenstock, president and CEO of the American Hospital Association, said the AHA is pleased that the President's budget doesn't include any new reductions in payments for hospital services to Medicare beneficiaries, but it's "deeply disappointed" that the budget reduces Medicaid.

"(A)t a time when hospitals have already been asked to absorb big cuts at the state level and state budgets are already stretched, it is unwise to ask states to continue to do more with less," he said. "In addition, we are also disappointed to see elimination of funding for the children's graduate medical education program at a time when there is a need for an expanded physician workforce."

Umbdenstock said the AHA fully supports eliminating future reductions to physicians, but warned the answer to the physician payment issue is not cutting one provider to reimburse another.

[MedPAC recommends a 1 percent pay increase for doctors. Read more.]

See Sebelius' entire budget testimony here.

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