This week, the U.S. House of Representatives passed H.R. 3630, which would cut more than $17 billion in hospital funding as part of a year-end tax and unemployment package that includes a two-year fix for physician payment under Medicare.

Although the American Hospital Association (AHA) and the LHA support eliminating the cuts to physicians, we strongly oppose reducing payments to hospitals to pay for the physician fix. It is the LHA's understanding that the Democratic leadership in the Senate is developing its own proposal, and there will be further negotiations to follow with the House.

One provision of that proposal would cap "total" payments for non-emergency hospital outpatient department payments for evaluation and management services at the rate paid to physicians for providing the services in their offices (an estimated $6.8 billion from FY 2012 to FY 2021). This would reduce the hospital payment by at least 71 percent for 10 of the most common outpatient hospital services.

The second provision would reduce reimbursement for Medicare bad debts from 70 percent to 55 percent phased in between 2013 and 2015, a cut across all provider types of over $10 billion over the next ten years.

At the time of print, a tentative agreement among the White House, Senate and House had been reached, but no details have been released.

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