Senate Misses Deadline for Delaying Medicare Pay Cut

April 14, 2010

Editor's note: On April 15, 2010, the Senate and the House voted to pass the delay of the Medicare pay cut to June 1, and President Obama signed the legislation later that night.

April 14, 2010 — Senate Democrats are still trying to postpone a 21.2% Medicare pay cut for physicians from April 1 to either May 1 or June 1, and they may get the job done by week's end.

However, they have missed a deadline of sorts that may temporarily complicate physicians getting reimbursed by Medicare.

The pay cut technically took effect on April 1, but the Centers for Medicare and Medicaid Services (CMS) tried to spare physicians the consequences by instructing carriers to hold payment on claims for services rendered in April for the first 10 business days of the month — that is, through today. The hope was that Congress would postpone the pay cut before tomorrow, April 15, which would allow carriers to reimburse suspended physician claims at the old rate.

The House has already passed a bill delaying the reduction to May 1. Senate Democrats have tried to follow suit with their own bill, and Sen. Max Baucus (D-MT) has proposed an amendment — not yet approved — that would push the effective date out to June 1. However, Democratic lawmakers have encountered procedural roadblocks from Senate Republicans who say the measure adds to the federal deficit instead of paying for itself. Medicare reimbursement is just one part of the bill, which also would extend expired unemployment compensation benefits and subsidies for health insurance premiums for out-of-work Americans under the COBRA program.

By the time the Senate adjourned Wednesday night, it had still not voted on its bill to postpone the pay cut. So what happens next to those suspended physician claims from the first 10 business days of April? Medscape Medical News posed that question to CMS, but as of press time, the agency had yet to answer the question or publish any guidance on its Web site about the fate of those claims. However, the agency did issue guidance on a similar payment hold in January 2010 that may apply to the current situation.

CMS had instructed carriers to sit on claims with January service dates for the first 10 business days of the month because it anticipated the possibility of the pay cut taking effect as scheduled on January 1, with Congress not acting to postpone it until later in January (in fact, Congress voted in late December to delay the cut until March 1, and followed up with another extension to April 1). On December 21, CMS announced on its Web site that after the end of the first 10 business days of January, suspended physician claims would enter the payment processing pipeline.

"This, of course, could result in claims being processed with the negative 21.2% update," stated CMS. That guidance assumed that Congress might not avert the January 1 cut by the tenth business day.

CMS also stated that if Congress did eventually act to avert the cut, any claims processed at the reduced rate would be automatically reprocessed at the old higher rate, as long as what the physician charged was higher than the allowable amount in the slashed Medicare fee schedule. The rationale here, stated CMS, is that Medicare pays the lesser of either the Medicare allowable amount or the physician's own charge for a service.

CMS suggested back in December that physicians delay submitting claims to their Medicare carriers "until it becomes clearer as to whether new legislation will be enacted or until cash flow becomes problematic." By doing so, they could avoid having their claims possibly processed twice — once at the new reduced rate and then again at the old higher rate.

Organized medicine has warned that if the massive reduction in Medicare reimbursement takes effect, many physicians will turn away seniors as well as military families whose TRICARE coverage is based on Medicare rates. Medical societies have lobbied Congress to scrap the sustainable growth rate formula that Medicare uses to determine physician compensation and replace it with something more equitable.


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