Obama signs debt deal as providers weigh its ramifications

President Obama on Tuesday signed the fiscal year 2012 budget and deficit reduction agreement (S 365), prompting concern among hospitals and physicians, who say Medicare cuts could stifle access to care.

Under the new law, federal discretionary spending would be cut by a total of about $2.4 trillion across the next decade, while the debt ceiling would be raised in two stages. The plan would enact an immediate debt-limit increase of $900 billion, followed by an increase of between $1.2 trillion and $1.5 trillion at a later time, at the president's request.

In addition, the deal requires a new 12-member bipartisan congressional panel to develop another deficit-reduction package with $1.5 trillion in cuts, which Congress would have to approve by late December of this year. If the panel does not come to an agreement, or Congress rejects its recommendations, the plan automatically triggers $1.2 trillion in automatic spending cuts, which would be evenly distributed between defense and non-defense purposes.

A House GOP summary of the debt deal clarified that the automatic spending cuts will apply to Medicare, not Medicaid, other entitlement programs or civil or military spending. A White House fact sheet also indicated that the cuts to Medicare will be limited to 2% of the program's cost.

Medicare pay cuts could reduce access to care, experts say

Officials in the hospital industry—which agreed to about $155 billion in spending cuts to help subsidize the cost of expanding health coverage to more uninsured U.S. residents under the health reform law—warns that further cuts could add additional pressure on struggling EDs and force trauma units to close. In addition, lobbyists for the providers have said that the potential cuts could compromise Medicare beneficiaries' access and quality of care, according to the Boston Globe.

Meanwhile, the American Medical Association (AMA) is preparing for further Medicare payments cuts on top of a scheduled cut in January, CQ Today reports. The most recent "doc-fix" bill enacted in December 2010 is scheduled to expire on Jan. 1, 2012, at which point physicians face a 29.4% payment rate cut.

AMA President Peter Carmel said that his group expects the payment issue "will be among those the committee will address," and an American Osteopathic Association official said the group is hopeful the panel will enact a long-term fix to the physician payment formula (Steinhauer, New York Times, 8/2; Rogers, Politico, 8/2; Levey/Cloud, Los Angeles Times, 8/3; Adamy, Wall Street Journal, 8/2; Jan/Emery, Boston Globe, 8/3; Ethridge, CQ Today, 8/3 [subscription required]; Shiner/Brady, Roll Call, 8/3; Ota, CQ Today, 8/2 [subscription required]; Pear/Rampell, New York Times, 8/1).

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