Discussions Regarding Scheduled Physician Fee Cuts and Possible Reductions in Medicare Advantage Payments Getting Serious

As the year winds down, the Congress must deal with the scheduled January 2008 9.9% Medicare physicians fee cut. Both Democrats and Republicans want to fix it.

To fix the physician fee cut, proposed cuts to Medicare Advantage have been on the table.

Senate Finance Chair Max Baucus (D-MT) has been working on a package that would cost $25 to $30 billion and fix the physician fee problem not only for 2008 but for 2009 as well. His plan would also spend more money on rural and low-income seniors.

Baucus would cut the Medicare Advantage payments by $8 to $12 billion to help pay for the package.

Meantime, the ranking Republican member on the committee, Chuck Grassley (R-IA), is working on a smaller bill that would only fix the physician fee problem for one year.

It seems that Republican members of the committee don't want any significant cuts to Medicare Advantage.

With the committee apparently split on party lines over big cuts to Medicare Advantage one could conclude that Baucus is going to have to back-off on his plans in order to workout a compromise.

He will not have to.

This issue will be part of the year-end omnibus budget bill where the committee chairs for the majority party will have enormous say on what is in the final bill. Elements of the final bill don't even have to clear a committee or either the Senate or House floor--they can be dropped in at the last minute. In fact, this is how the Republicans dealt with the Medicare physician fee problem late last year.

Also, a budget bill is not subject to the 60-vote rule in the Senate--a simple majority gets the job done. That final budget bill is very hard for a president to veto because it contains so many different matters that all sides will want approved.

Then there is what the House will want to do with the doc fees and Medicare Advantage. They will likely be even more aggressive than Baucus and it is those Democrats that Baucus will have to compromise with.