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Republican senator sees short-term Medicare "doc fix"

By David Morgan

WASHINGTON (Reuters) - U.S. lawmakers are close to a deal that would stave off steep cuts in Medicare reimbursements for physicians for the next 10 to 24 months, a top Republican senator said on Tuesday.

"We've got the next two or three days and perhaps these issues will be largely resolved today," Senator Jon Kyl, a member of a bipartisan committee seeking agreement on a so-called "doc fix," told about 500 physicians who have flocked to Washington this week to lobby lawmakers on the issue.

Doctors who treat Medicare patients are just over two weeks away from a 27 percent pay cut under a government funding mechanism designed to restrain the cost of the federal healthcare program for the elderly.

Republicans want to postpone the pay cut for 24 months, while Democrats are pushing for 10 months, according to Kyl.

"There's a potential sort of compromise in the middle at 12 months. But those are your choices: either 10 months, 12 months or two years," he said at a conference of the American Medical Association, the leading U.S. physicians lobby group.

Kyl, who is the No. 2 Republican leader in the Senate, said Congress is unlikely to repeal the contentious reimbursement mechanism because a long-term solution would cost more than $300 billion.

He urged his audience to lobby Congress to settle on a short-term solution rather than push for permanent repeal.

The issue of physician payments is part of legislation that also would extend a payroll tax cut for workers and jobless benefits for the long-term unemployed, both of which are set to expire February 29. Lawmakers want to finish negotiations by week's end, when Congress is set to start a week-long break.

Republicans in the House of Representatives plan to hold a separate vote on the payroll tax cut extension, while continuing negotiations on the doc fix and jobless benefits.

The pay mechanism, known as the sustainable growth rate, was imposed by Congress as part of the 1997 Balanced Budget Act. But lawmakers have prevented it from taking effect through temporary fixes that have ballooned the cost of repeal to $316 billion over the next 10 years.

Spending on Medicare is widely seen as a leading driver of future U.S. debt because of uncontrolled annual increases in the cost of delivering healthcare services.

But doctors have warned that failure to replace the mechanism and its threatened pay cuts with a modified payment formula could force physicians to stop taking new Medicare patients.

The price tag of a permanent solution has stymied the efforts in Congress, which is under pressure to restrain huge annual budget deficits and offset new costs with spending cuts.

A bipartisan "super" committee, set up last year to trim $1.2 trillion the federal deficit over 10 years, tried but failed to find agreement on reimbursements.

Kyl said the current panel could agree to use $191 billion in savings from winding down of the wars in Iraq and Afghanistan to pay off part of the 'doc fix' cost that represents past pay cuts that were never imposed. Kyl described that segment of the cost as "bad debt that's never going to get paid off."

"I've actually persuaded my colleagues to go along with this proposition. So I think there is a good chance," he said.

But Kyl told his audience that the remaining cost would likely prohibit pay mechanism's repeal, leaving to face annual fixes over the next several years while policymakers search for a replacement.

(Additional reporting by Donna Smith)

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