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Congress Postpones Medicare Physician Reimbursement Rate Cuts

Industries Served
12.02.10

On Monday, November 29, 2010, the U.S. House of Representatives approved a bill passed in mid-November by the U.S. Senate which would delay a cut in physicians’ reimbursement rates under Medicare. President Obama signed the legislation delaying the Medicare physician pay cut late on November 30, so that instead of a 23% Medicare pay cut for physicians, there is a 2.2% reimbursement increase. The cut was originally scheduled to become effective December 1, 2010; the bill postpones the effective date until January 1, 2011.

The recent congressional postponement is not the first time the Medicare physician reimbursement rate cuts have been delayed. Starting in 2003, Congress has repeatedly delayed such cuts. In 2008, when Congress failed to act in time to extend a temporary postponement of a 10.6% rate cut, Medicare held physicians’ claims to avoid paying them at lower rates and to afford Congress more time to act. In 2010 alone, Congress has delayed the proposed 23% cut three times. In March and April of 2010, Congress voted to delay enforcement of the proposed cuts and to extend the 2009 rates. In June 2010, legislation was passed that not only delayed the cuts but actually increased reimbursements by 2.2%. The one-month postponement is estimated to cost about $1 billion over 10 years, to be paid for with savings from cuts in reimbursement for therapy services.

Congress has repeatedly delayed implementing physician reimbursement rate cuts due to public fears, and threats by physicians and medical associations, that large numbers of physicians will drop out of the Medicare program should their reimbursement rates be lowered, and that those members of the population covered by Medicare, including the elderly and disabled, would be unable to obtain necessary medical care. Because  reimbursement rates for Tri-Care are tied to Medicare reimbursement rates, these cuts would also be expected to affect military service members and their families. Members of the Senate Finance Committee indicated that the one-month postponement will allow the chance to develop a longer-term fix. Senate Finance Committee Chairman, Max Baucus, D-Mont., and the panel's top Republican, Charles Grassley of Iowa, say they are working on a 12-month postponement that would provide time to devise a new system for paying doctors. The American Medical Association has backed a 13-month extension which would protect doctors from a reimbursement rate cut until 2012. The Congressional Budget Office has indicated that such an extension would cost $15 billion.

While it is unclear whether the one-month delay will afford Congress enough time to design and implement a long-term fix, physicians will at least continue to be reimbursed under the current rates until the end of the year. Doctors will face a payment cut of almost 25% on January 1 if Congress doesn't act on another postponement. 

In a statement released by the White House, President Obama is urging Congress "to now pass a one-year extension to ensure seniors maintain access to the doctor they know and trust over the coming year." It is interesting to note that the first baby boomers turn 65 next year and become Medicare eligible, marking the start of a large expansion of the Medicare population.

For more information, please contact Kim Harvey Looney, Seema Kanwar or any member of the Waller's Healthcare practice at 800-487-6380.

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