Medicare double-delay: Senate fails to act, CMS holds physician claims

Washington -- Congress ran out of time to reverse the 10.6% Medicare pay cut to doctors before leaving town for a week-long recess, sparking outrage from physician organizations that have been calling for action for the past six months.

Senate Democratic leaders on June 26 couldn't muster enough votes to consider final approval of a bill that would have eliminated the cut and provided a 1.1% pay increase in 2009. The House on June 24 overwhelmingly passed that measure.

Senate backers of the bill needed 60 votes to cut off debate, but they got only 59, with most Republicans voting against the motion. Because the procedure was the last vote scheduled on the issue before senators left for their holiday recess, the motion's failure meant that the 10.6% cut officially went into effect July 1.

The day before that, the Centers for Medicare & Medicaid Services announced that payment rates in 2009 would drop by an estimated 5.4% if Congress does not approve a solution that covers next year's payment schedule as well.

Most Senate Republicans and President Bush opposed the bill because it would have paid for the physician pay provisions by slashing payments to Medicare private health plans. American Medical Association President Nancy H. Nielsen, MD, PhD, said their decision put doctors "at the brink of a Medicare meltdown."

"The physicians of America are outraged that a group of Republican senators followed the direction of the Bush administration and voted to protect health insurance companies at the expense of America's seniors, disabled and military families," she said. "These senators leave for their Fourth of July picnics knowing that the most vulnerable Americans are at risk because of the Senate's inability to act to stop drastic payment cuts for health care services that are needed by our Medicare and TRICARE patients."

The July 1 reduction is likely to be temporary, and it is possible that not a single physician paycheck will be reduced by 10.6% if Congress acts soon after returning the week of July 7. The day after the Senate vote failed, the administration announced that Medicare will not process any physician claims during the first 10 business days of July for services rendered after the beginning of the month. The move is designed to give Congress more time to act.

If lawmakers approve a pay freeze for the remaining half of the year that Bush signs by July 15, CMS will start processing claims using the same rate schedule it has used since January. If the process goes beyond that date, a freeze would be retroactive and require Medicare to reprocess claims it already paid at the reduced level.

The administration promoted the claims delay as a reprieve for physicians, who otherwise would see the rate cut's effect on their first claims of the new month. Because Medicare by law already holds electronic claims for 14 days and paper claims longer before paying them, CMS insisted that the move would result in minimal cash flow disruption to doctors.

Democrats said the move was really a reprieve for GOP lawmakers who opposed the bill and was designed to give them political cover until final legislation is approved.

Senate Majority Leader Harry Reid (D, Nev.) vowed to bring the House-passed bill up for another cloture vote as soon as the upper chamber returned to work. Sens. John McCain (R, Ariz.) and Edward Kennedy (D, Mass.) were absent for the June 26 vote, and a "yes" vote from either of them would be enough to get the bill to the White House if the initial tally remains unchanged.

But Bush is holding firm to his intention to veto the measure because of the Medicare Advantage cuts, and Senate backers of the bill do not have the votes necessary to override a veto. Congress might go with a compromise bill that Senate Finance Committee leaders were negotiating that would not cut so deeply into health plan payments.

At AMNews deadline in early July, the committee had not released all of the details of the developing consensus measure. Congressional aides said, however, that the bill might keep rates at January 2008 levels for the next 18 months instead of giving doctors a 1.1% raise in 2009.

Damage done

Even if Congress and the president address the payment issue soon, the fact that they allowed an unprecedented double-digit cut to go into effect has physician organizations fuming.

The Texas Medical Assn. assailed the state's two Republican senators for voting against the payment patch and vowed that choosing to protect insurance company profits over access to physician care for patients would have consequences. Sen. John Cornyn (R, Texas), who is in a tough re-election campaign, lost the support of the association's political action committee with his vote.

"There is talk, and then there is action," wrote Manuel Acosta, MD, chair of the PAC's board of directors, in a June 27 letter to Cornyn. "We expect our elected officials to show leadership and do the right thing. Absent that, TEXPAC has rescinded our endorsement of your candidacy."

At least one Republican is already regretting his "no" vote. Rep. Wally Herger (R, Calif.) wrote a letter to physicians in his state apologizing for opposing the House bill and saying the GOP leadership had convinced him that the vote was a political exercise on a bill that would not become law. He changed his mind after physicians called his office to complain.

Physicians and Democratic lawmakers are particularly upset that debate broke down over payments to Medicare Advantage plans, which receive higher average rates per beneficiary than the amount traditional Medicare spends. A Government Accountability Office study released June 25 reported that health plans spent less than they expected on patient care in 2005, resulting in more than $1 billion in extra Medicare profits for insurers.

Karen Ignagni, president of the trade group America's Health Insurance Plans, said slashing Medicare Advantage payments by billions of dollars will cause seniors to lose the added benefits that many of them get through private Medicare plans.

Trouble ahead

Anything short of immediate action to reverse the cut will have serious consequences for the nation's seniors, said Jeffrey P. Harris, MD, American College of Physicians president. Many primary care doctors who say they have been limping along under Medicare's payment schedule say they cannot survive a double-digit cut.

"Congress needs to understand that many internists are close to despair and will have to close their practices if the cut remains in effect," he said.

American Academy of Family Physicians President James King, MD, said family physicians have seen a 20% increase in the costs of running their practices since 2001 while Medicare pay has stagnated. Practices struggling to run a small business against these imposing odds are at real risk of needing to close their doors if the rate reduction is not stopped immediately, he said.