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Senate Squabbles over Taxes, but Passes Doc Fix

June 18, 2010

The Senate did not manage to overcome a filibuster to pass its tax extenders and unemployment benefits extension bill on Thursday evening, but it did at least succeed in getting the so-called “doc fix” provision passed on Friday, just in time to avert a steep reduction in doctors’ Medicare reimbursement rates.

Republicans were united in opposition to the bill during a vote on Thursday evening, and they were joined by Democrat Ben Nelson of Nebraska and independent Joe Lieberman of Connecticut. One of the controversial provisions was the steep cost of the approximately $120 billion package of extensions on expired tax cuts and unemployment benefits, which Democrats have been trying to reduce via a series of amendments. Also controversial were some of the offsets in the bill designed to raise revenue by increasing the taxes on the “carried interest” of hedge fund managers, private equity firm partners, venture capitalists and real estate investment partnerships. Another controversial provision would increase taxes on certain types of professional services firms organized as S corporations, which has provoked opposition from the American Institute of CPAs and the National Society of Accountants (see Accounting Groups Protest S Corp Tax Hike).

Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., tried to allay concerns about those two provisions by watering them down somewhat in the past two weeks, but still not enough to satisfy some of the business interests lobbying hard against them (see Senate Modifies Tax Extenders Unemployment Bill). They were especially hoping to attract support from at least a few Republicans, particularly Olympia Snowe of Maine. Other senators were dismayed by an increase in a tax on oil from 8 cents to 49 cents a barrel to replenish the Oil Liability Trust Fund in the wake of the BP oil spill in the Gulf of Mexico.

However, the Senate was facing a number of deadlines Friday. More than 900,000 people who have been unemployed for over six months will not be able to apply for extended benefits without passage of the unemployment extension provision, according to the Associated Press, and physicians face a 21 percent cut in Medicare reimbursements.
However, the “doc fix” provision at least appears to have passed on Friday, and hopefully there will be action on the unemployment extension as well.

The Senate passed a six-month extension in the 2.2 percent update in the Medicare physician payment rate through Nov. 30, 2010. That was less than the 19 months in the original version of the fix, but the six-month extension won’t be as expensive. It’s estimated to cost approximately $6.4 billion over 10 years.

Another provision in the bill that passed provides temporary, targeted funding relief for single-employer and multiemployer pension plans that suffered significant losses in asset value due to the steep market slide in 2008.  Employers that elect the relief would be required to make additional contributions to the plan if they pay compensation to any employee in excess of $1 million, pay extraordinary dividends, or engage in extraordinary stock buybacks during the first part of the relief period.  Additional relief is available to certain plans sponsored by charitable organizations.  This proposal is estimated to raise approximately $2.102 billion over ten years.

Another provision in the bill clarifies a three-day payment window for Medicare outpatient services. Under current law, all outpatient services provided within three days before an inpatient admission and related to the inpatient admission are included in the bundled payment for that admission. The bill closes a loophole that had allowed the unbundling of services and submission of adjustment claims seeking separate and additional Medicare payments. This provision is expected to save $4.2 billion over 10 years and reduce excess spending.

Another provision would establish a CMS-IRS data match to identify fraudulent providers. Under current law, the Centers for Medicare and Medicaid Services and the IRS are not authorized to exchange information for the purposes of fighting Medicare fraud and screening potential new providers. This provision helps identify potentially fraudulent providers sooner by authorizing CMS to collaborate with the IRS to determine whether providers applying to enroll or re-enroll in Medicare have failed to file Federal tax returns or have delinquent tax debts. The data match would target certain high-risk provider types in high-vulnerability areas. This provision is estimated to save approximately $400 million over 10 years.

Comments (4)
If Nevada folks start voting for Ben Nelson, then we have a real problem in as much as he is from Nebraska.

Point of fact the Medicare fix affects folks over 65 and retired Military over 65 and should be a more permanent fix. Those who quiver over the DR fix should investigate what it costs to operate a practice as a DR and then they MIGHT understand the problem that needs to be fix more permanently.
Posted by Duane McDonald | Friday, June 18 2010 at 11:34PM ET
Those making negative comments about physicians should be aware of the fact that physicians have not received any reimbursement from Medicare in 3 weeks. If you have a large organization with many employees, you have no cash flow to pay them. Physicians have not had any increase in payments in years. Our costs of operation are increasing and our prices are fixed. Ask persons over 65 and on Medicare how difficult it is to find a primary physician. Physicians and other employers have been paying your unemployment benefits. Go ahead and kill the milk cow and see what you will get. I am sorry that you are unemployed, but causing health care unemployment because of a 21% reduction in payments is not going to get you a job. You are obviously a blood sucker.
Posted by howardmd | Friday, June 18 2010 at 11:29PM ET
This Is really ridiculous, These are really hard times and now is not the time for pondering over unemployment extension benefits, pass the bill! There are struggling families out here trying to make ends meet!
Posted by glitterbear33 | Friday, June 18 2010 at 10:41PM ET
well at least the doctors got their money while the unemployed struggle to feed their families. And the billion dollar hedge fund managers get to keep their 15 percent income tax rate which is lower than pretty much everyone's income tax in the united states.

Nevadans you better vote Ben Nelson out of office and Connecticut you do the same with Joe Lieberman because it is obvious that they could care less about the plight of families struggling right now while insuring the rich doctors and hedge fund managers keep their lavish lifestyles.

Very sad times in this country.
Posted by formerrepub11 | Friday, June 18 2010 at 10:08PM ET
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