The President, congressional Republicans and Democrats have been negotiating in public for the past several weeks. The President released his plan to avoid the fiscal cliff, calling for $1.6 trillion in new tax revenue (primarily from letting Bush tax cuts expire for top 2 tax brackets), a permanent extension of the nations’ debt ceiling and an additional $600 billion in spending cuts that were not specifically identified.
Congressional Republicans called the proposal “laughable” and claimed the President was over interpreting his mandate after winning reelection. Meanwhile, earlier this week congressional Republicans released their first counter proposal, calling for $800 billion in additional revenues (by limiting tax deductions, but no specific deductions were specified), and an additional $900 billion in spending cuts (increasing Medicare eligibility age to 67, means testing Medicare for high income seniors.) Congressional Republicans also would like to include dollars earmarked for the Affordable Care Act in the negotiations, but Democrats have thus far resisted these efforts.
The public negotiations are typically only theater for the press corp and ardent ideological supporters on both sides of the aisle, but if you look at the two proposals, there is a potential common ground on taxes and spending cuts. The end product must decide what to do about the $1.2 trillion “sequestration cuts” beginning January 1st, 2013 in the form of $600 billion in defense cuts and $600 billion in non defense (2% across the board cut to Medicare providers). Also part of the negotiations is an extension of the sustainable growth rate (aka, “doc fix”), slated to cost $25 billion for a 12 month extension.
Medicare providers, and O&P providers specifically, must remain vigilant in our efforts to avoid further reimbursement cuts and policies that would have a negative affect on our profession. For example, a liberal think tank, Center for American Progress, released a report earlier this week calling for expanded and accelerated competitive bidding for DMEPOS as a way to save $7.5 billion. To date, CMS has not included orthotics and prosthetics in DMEPOS competitive bidding; they have the statutory authority to include off the shelf orthotics, but have yet to do so. The worry is that any proposal that provides deficit reduction and does not directly harm patients will be looked at favorably by negotiators, so we must communicate the custom nature of orthotics and prosthetics to CMS and our local congressional members.
For now, the President has the slight upper hand on atleast one part of the negotiations, the Bush tax cuts. All Bush tax cuts will expire at the end of the year, regardless of a deal on the fiscal cliff. Congress must act to extend the Bush tax cuts, rather than act to stop them. Expect the public negotiations to continue, but private negotiations will also continue for an eventual deal. Many are expecting a short-term solution that avoids the worst of the “sequestration” cuts and gives lawmakers more time to negotiate a larger deficit reduction deal next spring.