The Senate Finance Committee and the House Committee on Ways & Means each approved versions of legislation on December 12, 2013 that would permanently reform the Medicare physician payment system. The Congressional Budget Office estimates that the bill proposed by the Senate Finance Committee would cost $150 billion over 10 years. Later in December, Congress enacted a three-month “patch” bill that prevented a 20 percent plus reduction in physician payment levels from going into effect. Thus, Congress has until March 31, 2014 to act on either a permanent Doc Fix or give itself more time to do so down the road. 

Congress must offset the significant cost of the physician payment legislation through spending cuts that have not yet been identified. As a result, payments for a wide spectrum of healthcare related items and services are on the table and subject to possible reduction to pay for the physician payment reform. The Medicare program likely will bear the brunt of these offsets, including Medicare reimbursement for drugs and devices, but we must be wary about possible spending cuts in other federal programs of interest to the healthcare and life sciences industries. 

In addition, the annual bills that have been enacted to provide temporary payment relief for physicians since 2003 have been important legislative vehicles for other healthcare initiatives. Thus, if Congress does enact a “permanent” fix to the physician payment system this Spring, there may not be a necessary, “must-pass” health care bill in the next year. As a result, stakeholders involved in the healthcare and life sciences industries may have limited opportunities to pursue and achieve legislative public policy goals for the remainder of 2014 and possibly 2015. 

Members of the healthcare and life sciences industries should closely monitor the evolving legislation related to reforming the physician payment system to evaluate whether the offsets identified by Congress will have an impact on their businesses. They should review their public policy agendas, and ensure that policymakers are aware of their priorities.