Progress stalls on multiyear Medicare pay patch

Washington -- For the third time this year, a 21% cut to Medicare physician pay officially will go into effect after Congress again ran out of time to prevent the reduction.

The Senate left town May 28 for a weeklong Memorial Day recess, although the House later that day passed legislation to prevent cuts through 2011 and replace them with pay raises. Because the upper chamber is not scheduled to return until the week of June 7, the reduction will take effect June 1.

The Senate's lack of action was strongly criticized by physician organizations, including the American Medical Association.

"The Senate has turned its back on seniors, and America's physicians are outraged that Congress has deserted patients by failing to address this year's Medicare cut before the June 1 deadline," said AMA President J. James Rohack, MD. "Senators are more interested in heading home for the holiday than in preventing a Medicare meltdown for seniors."

As it did after both other times this year when Congress ran out of time to prevent the cut, the Centers for Medicare & Medicaid Services said it would instruct contractors to hold June claims from physicians for 10 business days, the maximum time allowed by statute. That means if lawmakers approve legislation soon after returning from recess and retroactively reverse the 21% reduction, physicians might not see any payments at the reduced rate.

Momentum on a multiyear fix stalled in Congress largely over cost concerns. Earlier in the week of May 24, lawmakers were moving forward on a 3½ year package that would have replaced cuts with pay updates through 2013. But the size of the temporary fix was reduced to 19 months when fiscal conservatives objected to the strain the initial proposal would have placed on the federal deficit.

The AMA and other physician organizations argue that a permanent overhaul of the system is the only way to avoid the worsening cycle of temporary patches followed by larger reductions. If the Senate approves the House-passed 19-month legislation, doctors will receive a 2.2% raise for the rest of 2010 retroactive to June 1, followed by another 1% raise in 2011. But in 2012, physicians would receive a 33% cut as the system reverts to the old pay formula baseline.