KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Medicare Cuts To Doctors Payments Go Into Effect Today

Starting today, doctors face a 21 percent cut in their reimbursements from Medicare based on a federal budget law that sets physican payments based on other economic factors. In past years, Congress has routinely waived such cuts. The House passed a bill to again postpone the cuts but a similar attempt in the Senate stalled last week. Many physicians and health professionals worry that the reimbursement reductions could cause doctors to see fewer Medicare patients.

The Tennessean: "Many doctors, meanwhile, are holding out hope for a 'permanent fix' to how physicians are paid. In the interim, more doctor practices are considering not accepting new Medicare patients. Many other doctors are seeking employment at hospitals. And others are focusing more on patients who pay out of pocket and ending ties with insurers that cut rates. If the Senate passes the temporary fix that's expected to stave off the 21 percent cut, it would be the latest in a series of patches that have become a near-annual ritual in Congress since 2003" (Ward, 3/1).

The Jackson Clarion Ledger: "Centers for Medicare and Medical Services said all Medicare reimbursements filed by physicians will be held for the next 10 business days, effective Monday, to give Congress additional time to debate the issue" (Watkins, 2/28).

Fort Worth Business Press reports on statements from Dr. William Fleming III, president of the Texas Medical Association. In a statement, he said "'For the past nine years, the cost of running a doctor's office has increased dramatically. At the same time, what the government pays your doctor to care for Medicare patients has not kept pace. The flawed payment system is unsustainable. ... In fact, come March 1, when the 21.2 percent cut goes into effect, physicians will receive less from Medicare than they currently receive from Medicaid. This is appalling because no one pays less than Medicaid'" (Bassett, 3/1).

McKnight's Long Term Care reports that the Senate bill failed to gain enough bipartisan support to prevent the cuts. "During negotiations, retiring Sen. Jim Bunning (R-KY) repeatedly blocked the bill, arguing that its $10 billion price tag was too much of a burden on the already massive federal budget deficit, according to the Associated Press. The Centers for Medicare & Medicaid Services could choose to withhold payments to Medicare physician until a solution can be found. It would be a remedy that physician groups favor because they then would avert having to later refile claims that were paid at a lower rate if a fix to the payment formula is decided upon soon, which many observers expect" (3/1). 

Health and Age: "According to a recent poll of neurosurgeons, nearly 40% indicated that they would cut back on seeing new Medicare patients if Medicare reimbursement continues to fall. And, 18% of the neurosurgeons surveyed indicated that they would stop accepting new Medicare patients entirely. Even established Medicare patients are at risk, as 27% of these surgeons said they would treat fewer established Medicare patients if this bill is passed" (Chen, 3/1).

NPR reports on the issue's long history: "The story goes all the way back to 1965, when the federal government was about to launch Medicare - the health-insurance plan for the elderly. The idea of a government-run health-insurance plan made doctors nervous, and Lyndon Johnson's administration was worried that doctors wouldn't take Medicare patients. So Joseph Califano, Johnson's adviser for domestic affairs, made what seemed like a small concession: Medicare would pay doctors whatever they thought was reasonable. ... Within two years, Johnson's advisers saw that the amount Medicare was paying doctors was rising far more quickly than had been anticipated. They wanted ... Congress to change the payment structure. But doctors, who had a lot of sway with Congress, found they liked the payment system. So the system stayed in place for decades, as medicine got more expensive."

"Then, in 1986, a Harvard economist named William Hsiao decided to figure out a better way to pay doctors. He thought he could figure out the right price for each and every thing a doctor does. ... In 1992, Congress adopted Hsiao's physician-payment scale, and it worked - but only for a few years. ... Congress tried to slow the growth of doctor pay by saying total payments to doctors could not grow faster than the overall economy. When the total amount Medicare was paying to doctors grew faster than the overall economy, the rates for each procedure and service were supposed to be cut. But doctors, naturally, lobbied against letting those cuts take effect" (Kestenbaum and Joffe-Walt, 2/26).

The Sioux Falls Argus Leader: "Doctors and their clinics might need to reconsider how they handle Medicare patients, and some are prepared to stop accepting them for care, [Dr. Thomas Huber, president of the South Dakota State Medical Association] said. ... Mike Fierberg, a spokesman for the Centers for Medicare & Medicaid Services, said the government has taken steps to deal with the problem including instructing 'contractors to hold all claims starting Monday for 10 business days' ... That maneuver creates a window for the Senate to take action to prevent the cut, he said. Medical offices that file claims for serving patients on Medicare typically are paid within 15 days if they file electronically and within 29 days if they file with paper. The additional 10-day hold protects the care providers, he said" (Walker, 2/27).

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