February 17, 2012, Congress passed the Middle Class Tax Relief and Job Creation Act of 2012. The legislation includes a ten-month extension to a Medicare physician pay freeze. Without the extension, the sustainable growth rate formula would have required a 27% cut to Medicare physician pay as of March 1.

The U.S. House of Representatives Ways and Means Committee released a summaryof the legislation, noting that the ten-month doc fix will be paid for with a 65% decrease in Medicare bad debt reimbursements to hospitals and skilled nursing facilities beginning in FY 2013 for those providers currently reimbursed at 70% as well as a phase-in of the 65% reduction over the next three years for those providers who are currently reimbursed at 100% of their bad debt (e.g., FQHCs and dialysis centers). In addition to the reduction of bad debt reimbursement, the legislation also reduces clinical laboratory services payment rates by 2% in 2013 and cuts Medicaid disproportionate share hospital (DSH) allotments.

This ten-month extension follows a two-month extension approved by Congress in December 2011. The Medical Group Management Association reports that physicians now face the threat of a 35% Medicare payment reduction in 2013.