Senators split on plans to avert pay cuts

Washington -- At the end of the first week of June, lawmakers introduced legislation that would cancel the scheduled July 1 Medicare payment cut to physicians. But very little time is left to iron out funding disagreements between Democrats and Republicans.

Senate Finance Committee Chair Max Baucus (D, Mont.) on June 6 introduced the Medicare Improvements for Patients and Providers Act of 2008. The bill would replace the upcoming 10.6% reduction with a rate freeze for the remainder of the year. In 2009, physicians would receive a 1.1% raise instead of an estimated 5% cut.

Sen. Charles Grassley (R, Iowa), the Finance Committee's top Republican, two days earlier unveiled the outline of a competing GOP bill that would include the same payment changes. But Baucus and Grassley have different ideas about how to fund the six-month rate freeze and the year-long raise.

The Baucus bill would focus primarily on reducing Medicare payments to private insurance companies through Medicare Advantage, in part by removing nearly $2 billion from a special fund designed to keep insurers in the program. At press time, Grassley had not specified how Congress would pay for his bill but said that it would not focus so heavily on Medicare Advantage.

The disagreement is significant and caused Senate Democrats to break off negotiations with their Republican colleagues several weeks before each side unveiled its own measure. White House officials said that President Bush would veto any legislation that targeted Medicare private plan payments, and Senate Democrats cannot obtain the 60 votes necessary to end debate and move to a final vote unless several more lawmakers cross the aisle on this issue.

Finance Committee members Olympia Snowe (R, Maine) and Gordon Smith (R, Ore.) are the only Republicans so far who have thrown their support behind Baucus.

With few remaining legislative days before the onset of the July 1 cut, the policy gulf between the two sides prompted some lawmakers to start to consider backup plans. Congress could pass a six-month payment patch or another short-term measure to buy more time to work out the longer-term funding dispute, congressional aides said. Alternatively, Congress could allow the 10.6% cut to take place temporarily and continue working toward an 18-month bill that would pay physicians retroactively for their lost payments soon after the measure obtained final approval.

Whatever path Congress takes, some physicians might see at least a few smaller Medicare checks before they are paid what lawmakers decide they deserve. Officials with the Centers for Medicare & Medicaid Services in May issued a warning that President Bush would need to sign any congressional compromise by mid-June if the agency were to have enough time to send amended payment instructions to Medicare carriers.

Physician support for bills

Despite the funding dispute, physician organizations expressed optimism that Congress would come to an agreement in time to stave off the upcoming reduction.

"The AMA commends Chairman Baucus for his leadership in working to enact legislation that will stop looming Medicare physician payment cuts that begin in less than 30 days," said Edward L. Langston, MD, then chair of the AMA Board of Trustees. "We look forward to reviewing the details of Senator Grassley's legislation to avert a Medicare access-to-care crisis as well, and we remain committed to final action before July 1 to ensure seniors' continued access to physician care."

The physician payment piece is not the only provision of interest to doctors in the roughly $20 billion Baucus bill and the outlined Grassley bill. Physicians starting next year would receive financial incentives of up to 2% of their Medicare payments for using electronic prescribing. The bonus would phase down to 0.5% in 2013. Starting in 2011, physicians would be required to use e-prescribing and would be penalized by at least 1% and eventually as much as 2% of their Medicare pay if they did not.

The AMA is pleased that the Baucus and Grassley measures both include bonus payments for e-prescribing, but Dr. Langston reiterated that the government must finalize standards for use of the technology, as well as lift a prohibition on electronic prescriptions for controlled substances, before physicians nationwide can go paperless with drug orders.

The American College of Physicians endorsed the Baucus legislation and wrote letters to lawmakers urging them to approve the bill. In addition to the 18-month physician payment piece, the measure includes provisions that particularly would benefit primary care physicians, including higher payment based on relative values for primary care services, increased funding for a Medicare medical home demonstration project and additional bonuses for primary care doctors working in underserved areas.