Senate Passes Statutory "PAYGO" Amendment, but Exempts Physician Fee Schedule - February 2, 2010

On January 28, the Senate voted to pass a $1.9 trillion debt limit increase to cover federal operations through the remainder of the year. As part of the increase, the Senate also passed an amendment approving a statutory pay-as-you-go (PAYGO) budget control measure. The PAYGO amendment requires new spending in the federal budget to be offset by corresponding cuts elsewhere. If, at the end of a congressional session, Congress has adopted legislation incurring spending without the requisite offsets, the President may sequester, or reduce federal spending, by an amount necessary to bring spending in line with offsets. Notably, changes to the Medicare physician fee schedule are exempted for a period of five years, granting Congress the ability to forestall scheduled physician fee cuts without having to make other budgetary adjustments. Congress may override PAYGO requirements through a super majority, which requires 60 votes in the Senate. The House, which has already passed a similar measure, is soon likely to vote on the legislation.