Prevention Fund Cut by $5 Billion to Pay for Temporary SGR Fix

February 17, 2012

Earlier this afternoon, both the House and Senate approved and sent the President the Conference Report for the Payroll Tax bill.  The legislation included a temporary patch to the Medicare Physician Fee Schedule preventing for 10 months a pending 27% cut in payment rates to physicians under Medicare.  Unfortunately, much of the “pay for” came at the sacrifice of the Prevention and Public Health Fund – to the tune of $5 billion. 

While the Partnership to Fight Chronic Disease (PFCD) supports efforts to ensure that physicians are fairly compensated for caring for Medicare patients, use of the Prevention Fund to pay for it is short-sighted and inappropriate.  The action only maintains the unworkable Sustainable Growth Rate (SGR) payment formula for 10 months at the expense of investing in prevention and wellness that can make a real dent in health care costs long term.  This temporary fix comes with no incentives to promote real savings in the Medicare program by moving from the current fragmented Fee for Service (FFS) environment to care delivery models which incentivize better health outcomes through more coordinated care.  Congress should instead focus on ensuring that the Prevention Fund is used for evidence based prevention and care coordination programs that have proven to show savings in the private sector over and over again.  Using the fund as seed capital to fund and scale programs that will bring long term savings to the Medicare program, like Community Health Teams and the YMCA Diabetes Prevention Program would provide Americans a far much better return on investment.

Finally, Congress should not make any additional extension of the SGR without at least committing to a timetable to bring real reforms to the FFS Medicare model that will provide beneficiaries with more integrated and coordinated care.

 Details of the SGR agreement: 

  • A 10 month Medicare SGR patch with a 0% update, resulting in another 32% cut on January 1, 2013
  • A 10 month extension of expiring Medicare programs such as the therapy caps exception, ambulance add-on, a grandfather for the pathology technical component and others

Paid for by: 

  • A $5 Billion cut to the Prevention and Public Health Fund in the Affordable Care Act
  • A 60% cut in Medicare “bad debt,” a $6.8 billion savings
  • Rebasing the Medicaid disproportionate share hospital (DSH) payment adjustment in 2021 at $4 billion
  • A 2.7% Medicare Clinical lab fee schedule reduction (roughly $1.75 billion to $2.25 billion)
  • Repeal of the Medicaid provision specific to Louisiana (e.g. the so-called Louisiana Purchase) in the Affordable Care Act, saving $2.5 billion. (all savings over 10 years)

At the very least, this news only reinforces the need for more education around effective health care reform and the best ways to overcome our struggling system. PFCD, like our fellow colleagues at Trust for America’s Health (TFAH) urge to you to take action and express your opposition to cutting the Prevention Fund. For more information, please visit the TFAH “Protect the Prevention Fund” website

We’ll continue to keep you all updated as more unfolds.