Planned Delay in Medicare 21.3% fee cut for Six Months
June 24, 2010–Washington, DC – In a surprise turnabout, coming the day after it had rejected the same measure, the US Senate reached a last-minute deal today to delay a planned 21.3% Medicare fee cut for six months. The legislation also provides a 2.2% payment increase.
Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) both said the compromise is “paid for” and won’t affect the national deficit. Under Senate rules, the agreement was passed by “unanimous consent” without a roll-call vote.
The legislators took turns complimenting each other for a new spirit of cooperation. They’d used heated rhetoric to bash each other Thursday night after a $118-billion package for a six-month delay in the Medicare pay cuts plus a finance package that extended jobless benefits and provided $24 billion to states for their Medicaid programs failed to pass.
The new pact was brokered by Senate Finance Committee Chair Max Baucus (D-MT), who said the agreement was a “good omen” that the two parties could work together on the rest of the finance package in the future.
The last-minute agreement means that the pay cuts, which technically went into effect June 1, will be rescinded, and physicians will be paid the full amount of their Medicare fees. If the Senate hadn’t acted, the cuts would have gone into effect today.
Medicare contractors were ready to start processing June claims at the reduced rate. But the Center for Medicare and Medicaid Services (CMS) was holding up the claims, anticipating that Congress would stop the reduction retroactively.
The House of Representatives must still pass the measure, and that’s likely to happen Monday. The CMS acknowledges that the uncertainty about the fee cuts and delayed processing of Medicare claims may present cash-flow problems for some doctors. It expects the delays to be only a few days.
Medical groups are still upset that the “doc fix” is only for six months instead of a longer reprieve from threatened pay cuts.
“The reduction in payments, even if temporary, creates havoc for practices,” the American College of Physicians said in a statement. “The situation is unacceptable, and the frustration and anger is understandable.” It said doctors need stable and predictable payments and called for a permanent fix.
Even before the vote Thursday, the American Medical Association at its annual meeting in Chicago mocked Congress for failing to grapple with the pay issue, saying the “Senate fiddles as Medicare burns” and that a six-month reprieve was inadequate.
The Medicare pay-cut issue is the result of a decade-old formula, called the sustainable growth rate, set up by Congress to slow the growth in Medicare spending. Reimbursement rates for Medicare would have been trimmed on a yearly basis. But Congress has deferred the cuts nine times since 2003, almost always just days before planned cuts would take effect. Changing the formula wasn’t included in the healthcare overhaul President Barack Obama signed into law in March.
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Many docs initially supported Obama’s healthcare reform initiative as we believed that we would gain some regulatory relief, malpractice relief, and a permanent reprieve from the abusive healthcare industry.
Unfortunately, Obama met repetitively with the insurance lobby, big pharma, and the hospital lobbies. The resulting bill largely protected these industies and as a result did not trim costs. In order to make the numbers work, Obama and the democrats left the Sustainable Growth Rate formula intact for physicians so that the numbers would look good.
Unfortunately, the SGR which ties total physician based expenditures does not work.
As a result of the baby boomers landing on the medicare rolls, will lead to a 40-50% drop in allowable fees for Medicare paid doctor visits over the next 5 years. At the same time, the new healthcare law include many unfunded mandates such as electronic medical records, increased documentation requirements, new billing requirements, and aggressive government auditing looking for fraud — in this case defined as any billed visit where documentation falls short — even if appropriate care was rendered.
Currently, most practices run a 60% overhead — primary care is usually higher. 23% cuts this November with additional cuts in January 2011 will be a death blow to many practices since all private insurance payments are tied to the medicare rate.
Unfortunately, the government has asked the wrong question… The right question is:
Why is overhead expense to take care of a patient higher in the US than the total office visit fee in many countries??
The answer lies in punitive government regulation and interference, the high costs of insurance collection, and malpractice insurance costs.
My colleagues who are medical specialists in France usually have one secretary for 2 docs as their only employee.
We have 7 FTE’s/doc. These greate people are part of the cottage industries of american medicine — transcription specialists, billing specialists, accountants, office manager, medical records tech, RN’s. All working to get us paid, help us work fast enough to keep up with overhead, report findings to comply with regulations, and keep us compliant with OSHA, HIPAA, work comp, accounting requirements, ADA, MC requirements, etc. etc.
Medicine is actually the easiest thing I do.
Many of these costs would simply go away if we were paid directly by the patient (who would submit their own insurance like in the 80’s) and dropped all govt payors (which would make us subject to fewer costly regulations and fines.)
Come December, this is what we are planning.
Our part of the state has been bleeding doctors for the last 10 years, so there is a shortage and plenty of work.
Hopefully someone in government will wake up so we can go back to taking care of patients and practicing medicine — not managing government regulation, fighting insurances, and lawyers.
As my countryman William Churchill once said: “Americans can be counted on to do the right thing… eventually.”
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