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Deal Saves Docs, Pinches Hospitals

Late on Tuesday, the House joined the Senate in approving a temporary fix to undo the "fiscal cliff" -- automatic tax hikes and spending cuts that went into effect on Tuesday. President Barack Obama told the nation shortly after 11 p.m. that he would quickly sign the measure into law.

While most of the attention was focused on avoiding big tax increases and maintaining unemployment benefits, the deal spelled a major relief to physicians, while imposing a worry on hospitals.

The deal averted a 26.5 percent pay cut for doctors who treat Medicare patients -- a pay cut so steep that many would likely have stopped accepting the insurance plan that covers seniors and the disabled.

Almost half of the  $30 billion cost over the next decade of canceling the doctors' pay cut will come from hospital payments, Kaiser Health News reports.  (The Kaiser story describing the deal was published before the House agreed to it.)

The cuts to hospital payments are in addition to those that were part of the Affordable Care Act. Additional cuts in Medicare spending (as part of what's been called "sequestration") have been delayed for two months, in the hope that Congress and President Obama can reach agreement on less arbitrary reductions.

More on the politics and the tax implications of the bill can be found at Washington Post.

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.