By Susan Cornwell
WASHINGTON (Reuters) - U.S. House Speaker John Boehner and Democratic Leader Nancy Pelosi are pursuing a bipartisan deal to spare physicians from recurring Medicare pay cuts, but the two leaders face a familiar conundrum: how to pay for it.
Hundreds of thousands of doctors who participate in traditional Medicare face a 21 percent cut in their reimbursements on April 1. The cut is part of a 1990s cost-saving initiative for the government healthcare program, which today serves 54 million elderly and disabled people.
The initiative has posed a long-standing problem, known as "doc fix," for Congress. Over 14 years, lawmakers have temporarily patched Medicare's "Sustainable Growth Rate" (SGR) payment formula 17 times to prevent sharp doctor pay cuts.
Boehner and Pelosi, along with several committee chairmen from both parties, are in talks to permanently replace the SGR, which linked doctors' pay increases to economic growth, with a more stable pay formula.
"We are proceeding in a positive way. It is an engine that is going to leave the station," Pelosi said on Wednesday at a press conference.
Boehner told fellow Republicans in a Tuesday caucus that the leaders sought "a bipartisan framework that solves this problem for good while putting in place several structural reforms that would strengthen the Medicare program for seniors and taxpayers," according to one source in the room.
Boehner said he hoped to reach agreement by week's end, the source said.
The plan under discussion would cost some $200 billion over a decade, lawmakers and aides say.
The doctors' caucus in the House is "delighted" with the emerging plan, said Representative John Fleming, a conservative Republican. He said the old repayment formula's uncertainty has "destroyed a number of practices."
But lawmakers have only worked out how to pay for $70 billion of the plan's 10-year cost, in part by means testing Medicare beneficiaries so people with higher incomes pay more.
Some fiscal conservatives in Boehner's caucus are wary. Republican Representative Raul Labrador said this week that it is "incongruous" for Republicans to be talking about balancing the budget in a decade, while the lasting "doc fix" being studied could add up to $130 billion to the federal deficit.
But a former head of the Congressional Budget Office, Douglas Holtz-Eakin, argued in a blog this week that the proposed structural reforms to Medicare should more than pay for the fix over 20 years.