Physician Groups Outraged at Medicare Pay Cuts

Mark Crane

June 18, 2010

June 18, 2010 — Starting today, physicians can expect Medicare to cut their fees by 21.3%, after the US Senate failed to pass a measure that would have delayed the planned reduction for 6 months.

Medical groups were quick to condemn the Senate for failing to enact the "doc fix" as part of a $118 billion package that also would extend jobless benefits and provide $24 billion to states for their Medicaid programs.

"The reduction in payments, even if temporary, creates havoc for practices," the American College of Physicians (ACP) said in a statement. "The situation is unacceptable and the frustration and anger is understandable. The College continues to apply maximum pressure on Congress to immediately halt the cut by enacting legislation that provides stable and predictable payments — with the goal of a permanent fix."

Even before the vote Thursday, the American Medical Association (AMA) at its annual meeting in Chicago mocked Congress for failing to grapple with the pay issue, releasing a statement saying the "Senate Fiddles as Medicare Burns."

The AMA voted to formulate legislation for a new Medicare payment option that would allow patients and physicians to freely contract for payments that differ from the Medicare schedule, while allowing patients to use their Medicare benefits. "A new patient-centered category of Medicare payment will allow seniors to use their Medicare benefit fully for the healthcare they need," said David O. Barbe, MD, an AMA trustee.

New Compromise?

Although frustrated and angry at the failure to pass the "doc fix" on Thursday, medical groups said they still believe the pay cuts will be rescinded during the next few weeks.

ACP said it expects that "Congress will act in the near term by enacting a fix that is retroactive to June 1. Medicare contractors will automatically adjust claims paid that reflect the reduction after Congress enacts the retroactive fix — enabling physicians to receive the additional payment consistent with the new law without them having to take any action. Further, Centers for Medicare and Medicaid Services intends to release official guidance that permits physicians to waive small beneficiary co-payment amounts associated with a retroactive fix. ACP had urged the CMS to minimize disruption to physicians and is pleased the agency is taking these actions."

The 56–40 vote Thursday night in favor of the $118 billion package, including the "doc fix," wasn't enough to overcome a filibuster. The entire Republican caucus plus Sen. Ben Nelson (D-NE) and Sen. Joseph Lieberman, a Connecticut independent, voted against the measure.

Some press reports said that a new compromise effort was still in the works Friday that could delay the Medicare cuts for 6 months, but other reports said the measure would not be taken up again until next week.

Partisan Rhetoric

Tensions were high in Washington, DC, as the partisan rhetoric intensified. After the vote, Senate Majority Leader Harry Reid (D-NV) told reporters, "Tonight, every single Republican voted to give doctors a 21% pay cut."

Sen. Max Baucus (D-MT), who had proposed a compromise amendment that would have delayed the planned Medicare cuts for 6 months instead of the 19 months called for in an earlier bill, said, "Given the attitude on the other side of the aisle, I don't know if anything will get a vote."

Republican Majority Leader Mitch McConnell (R-KY) told reporters that although Republicans also want to delay the Medicare pay cuts, the overall package was not offset by spending cuts and added too much to the deficit. "Even in the face of public outrage, Democrats are showing either that they just don't get it on this issue of the debt, or that they just don't care."

White House spokeswoman Amy Brundage blamed Republicans for the bill's failure. "These measures are vital to our nation's families and our economic recovery, and the president urges those opposing these measures to end this obstruction and stand on the side of the American people."

The Medicare pay cut 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 9 times since 2003, almost always just days before planned cuts would take effect. Changing the formula was not included in the healthcare overhaul President Obama signed into law in March.

The AMA and other medical groups argue that a Medicare pay cut will harm patient access to care because physicians are less willing to treat Medicare patients. A survey of 9000 AMA members revealed that 17% of physicians — and 31% of primary care physicians — would limit the number of Medicare patients they see because rates are too low.

The pay cut drama of 2010 has taken a toll on medical practice finances, according to an AMA survey.

In response to the 2 short-lived rate reductions in March and April, 39% of physicians delayed payments for supplies, rent, or other expenses; 17% took out a loan or line of credit to pay bills; and 17% held up paychecks or even furloughed or laid off employees, the association reports.

Such cutbacks make it less likely that medical practices will invest in health information technology and other improvements that policymakers consider vital to healthcare reform, the AMA notes.

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