Medicare pay cuts loom large and there is no easy fix.

Medicare payments to doctors were supposed to fall by 21% at the start of this year, but Congress passed a last-minute, two-month patch to block the cuts. Without action, those cuts again become a reality on March first.

The budget bill Congress passed in 1997 introduced the “sustainable growth rate” for Medicare, otherwise known as SGR. The SGR says basically that the amount Medicare pays doctors for an average Medicare patient can’t grow faster than the economy as a whole. If growth in payments per beneficiary grows more than the economy as a whole, the SGR says you have to lower payments to doctors across the board to keep costs under control.

The economy slowed and health-care spending skyrocketed earlier this decade, and reimbursements were cut in 2002. Every year since then, the SGR has called for more cuts. However, every time Congress has stepped in to block the cuts. Short-term patches of scheduled Medicare pay cuts to doctors have become standard operating procedure.

Now, according to the SGR, reimbursements should actually be cut by more than 40%--something that is not likely to occur.

The American Medical Association (AMA)and other physician groups are continuing to lobby lawmakers to enact a costly permanent reform to the complex formula that calculates the payment levels. The AARP is supporting their efforts, as is the Military Offices Association of America (MOAA) because the Pentagon’s health program pays medical providers at Medicare rates.

In addition to their joint lobbying campaign and efforts to activate their grassroots networks, the AMA, AARP and MOAA launched a television advertising campaign in eight states in January.

The Senate recently passed a pay-as-you-go law that would require balancing all new spending with tax increases or spending cuts. But, that legislation included a loophole: Congress can allocate an additional $82 billion for physician payments without having to find new sources of revenue or savings. That’s not enough to scrap the current payment system altogether, but it could be enough to block scheduled pay cuts for up to five years, further putting off the pain to future generations.

A bill to permanently block the cuts failed in the Senate last year, in large part because senators couldn’t figure out how to pay for it.

Supporters of the cuts argue that unless programs like Medicare and Medicaid are limited, they will devour greater portions of the federal budget, threatening its overall solvency.

Meanwhile, Senate Democrats plan to introduce another bill that would delay the effective date for more than 30 days. A previous Senate bill is allowed for the possibility of a 7-month delay.

It is anticipated that whatever solution comes outs, it would be retroactive to March 1. That way, CMS carriers would pay March claims that were put on hold at the current rate, although physicians would receive their money later than usual.

The CMS officials are struggling to do everything in their authority to minimize payment disruption to providers and prevent access problems for patients.

It remains to be seen if Congress postpones the pay a second and third time over the next few months. But one thing is certain: hard choices lie ahead, this can't go on forever. Some reports indicate the Democrat majority may soon bring to a vote stand-alone legislation (S. 1776) to repeal the SGR formula altogether. It's not like they were using it.

Leaving out an SGR "fix" from the health "reform" legislation" allows Democrats to free up billions of dollars that they can then apply to make other changes in a health care plan-making it easier for the majority to pass its government takeover of health care. So, a vote for S. 1776 could be seen as setting the stage for passage of a government takeover of health care. According to a Concord Coalition analysis in November of 2009, omitting an SGR fix in the Health Care bill understates the cost of health reform by nearly $250 billion.