[November 28, 2012]

Fitch: Fiscal Cliff May Slash Medicare Payments to Physicians

Unless averted by Congress and the Administration, the automatic spending cuts included in the so-called "fiscal cliff" would reduce the Centers for Medicare & Medicaid Services (CMS) reimbursement rates for physicians by 27%, according to an estimate by the Congressional Budget Office. If implemented, Fitch believes these cuts would have a significant negative effect on most of the U.S. healthcare industry and a particularly large impact on hospitals with large employed physician bases. In addition, these cuts could have unintended consequences, such as decreased physician access for Medicare patients.

Payments to physicians are subject to a sustainable growth rate formula used by CMS to calculate healthcare spending and bring it in line with budgeted expenditure over time. However, since 2003, Congress has deferred action on proposed annual rate reductions.

Additional information is available on www.fitchratings.com.

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