Medicare Likely to Pay Claims During Government Shutdown

March 03, 2011

March 3, 2011 — If the federal government shuts down later this month because of budget wrangling, Medicare claims from physicians probably will be processed and paid, based on reassurances given to organized medicine and what happened during the last shutdown.

However, the picture is murky. Neither the Centers for Medicare and Medicaid Services (CMS) nor the White House apparently has given any shutdown guidance to the private companies that process claims and cut checks for physicians on behalf of CMS.

"We haven't received any directions yet from the federal government...it's a little surprising," said Larry Leslie, contract administrator for Palmetto GBA, a Medicare administration contractor (MAC) that is a subsidiary of Blue Cross Blue Shield of South Carolina. Medscape Medical News heard the same story from 3 other MACs.

Medical societies also are in the dark.

"[CMS has not] told us anything, and it's not for lack of asking," said Shawn Martin, government-relations director for the American Osteopathic Association.

Jack Lewin, MD, chief executive officer of the American College of Cardiology, told Medscape Medical News that CMS has yet to fill him in, either. However, Dr. Lewin quotes Congressional staffers as saying that there is no reason to panic.

"They've said they'll try to keep both [Medicare and Medicaid] going," said Dr. Lewin. This message, he noted, has come from Democrats and Republicans, "but not from Tea Party types."

When asked what it has heard about the fate of Medicare claims during a government shutdown, the American Medical Association responded with a written statement from its president, Cecil Wilson, MD.

"We are in touch with the administration, and they are aware of the importance of the timely processing of Medicare claims,” said Dr. Wilson. “We will do everything possible to be sure physicians are paid in a timely manner so seniors will have continued access to the health care they need."

For the short term, physicians can breathe easier now that Congress has passed a bill funding government operations through March 18. That legislation, which President Barack Obama has signed, was necessary because lawmakers last year had appropriated money to keep the government running only through Friday, March 4, even though the federal fiscal year ends September 30.

However, another shutdown showdown is shaping up because of a likely stalemate over budget cuts. The Republican-controlled House has already approved a funding extension through September that would reduce current spending levels by $61 billion. Reductions for public broadcasting and family planning have aroused controversy, as have provisions to withhold funds for implementing the healthcare reform law, as well as some environmental regulations. The bill faces tough going in the Democratic-controlled Senate, although Obama is urging lawmakers to craft a compromise.

"We Have No Reason to Expect Not Getting Paid"

Medicare continued to pay physicians and hospitals during the last shutdown of the federal government, which took place when Bill Clinton was president. It was a 2-part affair, lasting 5 days in November 1995 and another 21 in December 1995 and January 1996.

In one sense, the ability to reimburse providers was never in question, because claims are paid out of Medicare trust funds that are separate from Congressional appropriations. However, payments to MACs for administering claims come from the CMS operating budget, which — unlike the trust funds — is vulnerable to Congress turning off the spigot. Therefore, in 1995 and 1996, MACs processed and paid claims on a credit basis for CMS, with the expectation of catching up later.

Larry Leslie at Palmetto GBA said he anticipates that his company would continue to process claims during a shutdown while floating CMS. At a MAC called Cahaba GBA, Chief Strategy Officer David Brown told Medscape Medical News that his company would accept and pay claims "unless instructed otherwise."

"We have no reason to expect not getting paid," said Brown.

However, there is a question of how long MACs would extend credit to the federal government. An official from the Department of Health and Human Services (HHS) warned during a Congressional hearing on the November 1995 shutdown that MACs "would have to cease Medicare payments if their cash ran out due to a longer hiatus."

That same hearing revealed that the White House Office of Management and Budget and HHS had begun formulating contingency plans for a shutdown in July 1995, roughly 5 months in advance.

In an email to Medscape Medical News, Office of Management and Budget spokesperson Moira Mack said that the federal government has a game plan in place for 2011, but she declined to disclose what it means for Medicare.

"We're not getting into hypotheticals," Mack said. She noted that both Obama and Congressional leadership want to avoid a shutdown in the first place. A spokesperson for HHS also declined to say what would happen to Medicare payments.

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