Congress Acts to Eliminate 3% Withhold

the U.S. House of Representatives passed an amended version of H.R. 674, legislation that prevents a planned 3 percent tax-withhold for many Medicare payments, by a vote of 422-0.　 The Senate passed this legislation on November 10 by a vote of 95 to 0. 　
The statute, originally passed in 2006 and delayed several times, called for all federal, state, and local government payments to those providing services or goods to have 3 percent of their payment withheld until the following tax year in an effort to increase tax compliance.　 However, the original statute was overly broad and would have applied even to Medicare payments made to physicians.
The legislation, now headed to President Obama for his expected signature, completely repeals this provision of law and eliminates the planned withholding.　
The cost of this repeal was offset by a change in the definition of Medicare Adjusted Gross Income for the calculation of eligibility for Medicaid or insurance subsidies under the Affordable Care Act.　
This modification was supported by a majority in Congress and the White House.
This represents a significant victory for physicians and a step forward in stabilizing the Medicare system. 　
The additional burden of a 3 percent tax-withhold would have been untenable in the current Medicare payment environment. 　
There is already a 20 percent gap between Medicare’s payments to physicians and the growing cost of providing care to seniors, and physicians now face a 27.4 percent cut on January 1 due to the broken Medicare physician payment formula.