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The deal approved by Congress and President Obama on January 2, 2013, to avoid the “fiscal cliff” brings temporary relief and permanent grief to physicians.

First, Congress extended the Medicare physician payment rate for a one-year period, which is based upon the program’s Sustainable Growth Rate formula. Had this extension not been granted, Medicare payments to physicians would have been cut by 26.5%. Physician and hospital groups have been calling for the repeal of this formula, arguing that it will lead to a reduced number of providers willing to take on Medicare patients.

The fiscal cliff legislation also delays a pending two percent reduction to physician payment rates and an eight percent reduction to medical education programs for two months, each of which are mandated by the Budget Control Act. Congress is being urged to address these issues as it grapples with the upcoming round of budget measures.

Second, the fiscal cliff legislation also includes a provision, titled “Removing Obstacles to Collection of Overpayments,” that increased the amount of time for which the government may recoup no-fault overpayments to providers from three years to five years. This change comes at the recommendation of the Office of Inspector General, which reported that nearly $500 million of identified nonfraudulent overpayments (e.g., data entry error) could not be recouped from Medicare providers because of the three-year statute of limitation. The extended limitations period means that if the government identifies an overpayment within five years after the payment is made, and the overpayment was not made due to fraud or abuse by the provider, subsequent payments to that provider may be reduced to recoup the overpayment. If the government does suspect that fraud or abuse was involved in the overpayment, then the government has other avenues of recoupment, which are not bound by the five year limitations period.

For more information, see generally the American Taxpayer Relief Act of 2012

For more reading on the collection of overpayments, click here.