A Senate-passed bill to stop a Medicare physician pay cut, among other provisions like a payroll tax cut extension, was denied a vote by House Republicans Tuesday afternoon. Until lawmakers pass legislation to avert it, doctors face a 27 percent pay cut at the beginning of next year. KHN’s Mary Agnes Carey talks to Politico Pro’s Matt DoBias about the “doc fix.” the politics around the provisions and what may be next for legislation to avert the pay cut.

>> Listen to audio of the interview.

MARY AGNES CAREY:  Good day, this is Health on the Hill.  I’m Mary Agnes Carey.  Just days away from Christmas, the Senate and House remain at odds over how to stop the scheduled 27 percent Medicare physician payment cut scheduled to go into effect on January 1.  Here with the latest on the “doc fix” dilemma is Matt DoBias of Politico Pro.  Thanks for joining us.

MATT DOBIAS:  Hi, Mary Agnes.

MARY AGNES CAREY:  House Republicans oppose legislation the Senate passed over the weekend.  With Republican support, that would extend the current Social Security payroll tax cut for another two months, as well as stop the scheduled Medicare physician payment cut for that same amount of time.  Why do House Republicans oppose this bill?

MATT DOBIAS:  The Senate passed a very short-term, fallback measure that covers all of those provisions throughout the first two months of 2012.  Now, Republicans oppose it in the House — quite honestly, it comes down to ideology.  I think they feel like they passed a better bill just a week earlier.  It does a long-term extension of unemployment; it does a longer term extension of the payroll tax break; and for our listeners, it, most importantly, extends what we call the doc fix for two years, and it gives physicians about a cumulative two percent update on that.  So I think they like their bill better.  And I don’t think they like the direction that the Senate Democrats might be taking it in.

MARY AGNES CAREY:   But the Senate Democrats rejected that bill for a variety of provisions, including some of the health care “pay-fors,” is that correct? 

MATT DOBIAS:  That’s absolutely correct.  The Senate Democrats, under the leadership of Harry Reid, are very reluctant to go back in the Affordable Care Act to take money to pay for the SGR patch.  They’ve shown some reluctance as well on some of the provisions that the House approved that end up cutting hospital Medicare payments.  So there is some reluctance on the “pay-fors” on the Senate side.

MARY AGNES CAREY:  House GOP leaders have decided to not have an up or down vote on that Senate bill, but instead have a series of procedural votes aimed at getting Senate negotiators back to the table.  Could you tell us a little about those votes?

MATT DOBIAS:  That’s what we’re seeing today:  This process is unfolding in the House.  What they’re trying to reach to ultimately is, through these series of votes, they want to basically force the Senate to re-open negotiations on this package. 

Again, it goes back to the House really liking the package that they passed, and now they want to try to compel the Senate to come back in during the holiday recess, sit down face-to-face and see if they can’t negotiate a smoother, longer-term path forward. 

MARY AGNES CAREY:  Why don’t they just vote up or down on the Senate bill?

MATT DOBIAS:  This is kind of the politics of it:  House Republicans don’t want necessarily to go on the record of voting down a package that actually gives most middle class Americans a tax break.  They want to kind of couch that vote.  So instead, they’ll take a series of votes on a number of different initiatives that will eventually lead them to, one would suspect, naming some lawmakers to actually enter into negotiations with the Senate.

MARY AGNES CAREY:  Sen. Reid has said he will not re-open negotiations with the House until it passes the Senate legislation.  So will the House Republican leaders’ strategy work?  In short, what’s the end game?

MATT DOBIAS:  This really is the gamble that House Republicans under leader John Boehner are taking right now.  To hold Harry Reid to his word, I genuinely believe that if it was solely up to the Senate Democratic leadership, they just would not negotiate with the House Republicans.

But President Obama has really made this legislative package one of his priorities.  It’s something that, for a number of reasons – and a lot of them are expiring provisions, and a lot of those provisions are on the health care side – President Obama really wants to get this passed.  So I imagine that there will be some pressure from the White House that will maybe smooth the way and may become a little bit clearer to us as the week progresses.

But I would imagine that President Obama will kind of assert his will. 

MARY AGNES CAREY:  If the doc fix isn’t resolved, the Centers for Medicare and Medicaid Services have already put out some contingency plans.  What can you tell us about those?

MATT DOBIAS:  This is a little bit of familiar territory for CMS, for Medicare, since they have found themselves in this position.  So what they’re doing is they are instructing their Medicare contractors – the ones who actually handle the claims – to hold payments that are charged in 2012 for ten business days.  The way that runs for business days in Medicare, that would take physician payments from Jan. 1 through 17.

The CMS is saying it shouldn’t have a financial impact on physician groups that bill through Medicare, because typically claims usually take anywhere from 14 days, if they’re done electronically, or well into the 20 day mark if they’re done on paper.

So CMS is a little bit irked that this hasn’t been resolved, but they kind of sent notice to their claims contractors to hold claims at least for ten business days.

MARY AGNES CAREY:  Thanks for the update.  We’ll stay in touch.  Thanks again to Matt DoBias of Politico Pro.

MATT DOBIAS:  My pleasure.