Government

Medicare is going on a short physician payment "holiday"

Delaying reimbursements allows the federal government to shift more than $5 billion into next fiscal year to meet a spending target.

By David Glendinning — Posted Sept. 18, 2006

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Physicians who bill Medicare for their services will not receive any reimbursements during the last week of this month, though the checks are expected to arrive soon afterward.

From Sept. 22 through Sept. 30, Medicare will postpone any reimbursements that it owes to physicians, hospitals and other program participants. All claims that are held as a result of this one-time delay will be paid on Oct. 2, according to the Centers for Medicare & Medicaid Services. Physicians will not receive any interest for the lost time value of the money, nor will the government pay any late penalty to doctors.

Congress mandated the payment hold as part of a deficit reduction act that became law in February. To achieve the legislation's target savings level, lawmakers agreed to shift the more than $5 billion that normally would be paid to Medicare participants during the last nine days of September into the next fiscal year, which begins Sunday, Oct. 1. In doing so, Congress is able to count the expenditures against next year's budget instead of the current one.

A CMS official said the agency had not received any complaints about the nine-day payment hold even after officially informing doctors and hospitals about the required move in May. The agency expects that the temporary withhold will not substantially impact the business side of physician practices.

But some physicians expressed concern about the strategy and worried that some doctors might suffer financially from being forced to forgo Medicare reimbursements for more than a week.

AMA considered action

During the American Medical Association's Annual Meeting in June, delegates from New York introduced a resolution calling on the AMA to work for a repeal of the payment "holiday," as some policy-makers have named the payment delay.

"Hospitals and physicians have bills that need to be paid, and the government has not declared a non-payment of financial responsibility holiday [for doctors]," the resolution stated.

The Medicare holiday also sets a bad precedent for the federal government, some delegates said.

Not only could the September delay have potentially harmful effects on physician practices, but Congress and the administration also might consider even longer delays the next time they need to avoid exceeding budgetary limits for the year, they said.

"Who's to say that there won't be a more significant deficit going into the next fiscal year, and so they'll delay payments for perhaps a month?" asked Richard M. Peer, MD, a vascular surgeon and president of the Medical Society of the State of New York. "Think of the impact of that on the practicing physician."

But the AMA House of Delegates ultimately voted down the resolution calling for a repeal of the statute. Opponents of the measure said the Association should focus its energy on longer-term problems with the Medicare physician payment system, such as upcoming annual cuts of about 5% over most of the next decade.

In addition, Congress helped offset the cost of freezing 2006 physician pay at 2005 levels in part by shifting these billions of dollars into the next fiscal year, some physicians noted. Physicians were headed toward a 4.4% cut in Medicare pay before Congress acted in February. Doctors briefly sustained the cut in January before the retroactive freeze took effect the next month.

"We recognize that this is certainly bad policy, even though it is a one-time fix," said John M. Zerwas, MD, an anesthesiologist from Texas and the chair of the AMA committee that considered the resolution. "We also recognize that this had an important part in maintaining the physician fee schedule this year."

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ADDITIONAL INFORMATION

The check is in the mail

The federal government is temporarily postponing Medicare reimbursement this month to meet a budgetary savings target set in law earlier this year.

Who is affected? All physicians, other health care professionals and facilities submitting Medicare claims.

How long is the payment hold? Nine days, from Sept. 22 to Sept. 30.

When will I be paid? Oct. 2.

Will I get interest? The government will not pay interest or late penalties.

Will this happen again? The government says it is a one-time policy, but there is no guarantee it won't happen again.

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External links

Centers for Medicare & Medicaid Services fact sheet on the nine-day Medicare payment hold on physicians, in pdf (link)

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