19-month Medicare pay patch fails in Senate

The latest bill, which passed the Senate June 18, would give physicians a 2.2% raise through November. Then cuts return.

By Chris Silva — Posted June 21, 2010

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A plan to reverse a 21% Medicare physician rate cut and raise doctor pay through 2011 failed to gain enough votes to proceed in the Senate, prompting Democratic leaders to throw out the House-passed 19-month solution in favor of a six-month patch.

Bowing to pressure from Republicans and conservative Democrats over rising federal deficits, Senate Finance Committee Chair Max Baucus (D, Mont.) offered a new unemployment and tax extenders package June 16 that included the pared-down physician pay piece. The patch would reverse the 21% reduction that took effect June 1 and replace it with a 2.2% update to physicians through Nov. 30.

But even the smaller bill failed to gain immediate approval in the Senate, which late on June 17 voted 56-40 on a procedural motion that required 60 votes. Senate Democratic leaders on June 18 gained unanimous consent to separate the physician pay piece from the rest of the package and approve it on its own. The provision now heads back to the House before going to President Obama's desk.

In failing to pass the 19-month patch, lawmakers broke another key deadline. The 21% cut officially went into effect June 1, after the House had approved the patch but before the Senate was able to follow suit. The Centers for Medicare & Medicaid Services instructed Medicare contractors to hold off on processing June physician claims for 10 business days, then announced June 14 that claims would be held an additional three days to give lawmakers more time to act.

That hold on claims officially lifted on June 18, meaning contractors could begin processing June claims at the reduced rate as soon as their systems had been tested to accept the change. If enacted, the patch would be retroactive to June 1, and any claims that already had been processed at the lower rate would need to be reprocessed automatically.

The American Medical Association, which has been calling for a permanent fix to the Medicare physician pay problem, blasted lawmakers for letting the situation get to that point.

"The Senate has been debating this issue for weeks, and the latest proposal is a six-month delay of the cut. Delaying the problem is not a solution," AMA President Cecil B. Wilson, MD, said in a June 17 statement. "Continued short-term actions are creating severe instability that harms seniors as physicians make decisions to protect their practices from Medicare's volatility."

Dr. Wilson issued his statement as the AMA prepared to deliver hundreds of white lab coats signed by attendees at the Association's Annual Meeting in Chicago. He said the coats were a "symbolic reminder" from physicians that the immediate Medicare pay crisis needed to be averted and the current system overhauled.

The latest revision of the extenders package, which also slimmed down several other provisions in the bill, was an attempt at a concession to lawmakers who said the new spending -- which would not be offset completely in the budget -- would add too much to the federal deficit. The six-month Medicare pay patch would cost about $6.5 billion over 10 years. The original 19-month provision would have spent $22.9 billion on higher physician pay over the decade.

Baucus introduced the substitute amendment to the extenders bill -- the American Jobs and Closing Tax Loopholes Act -- shortly after the larger package was also tripped up by a budget point of order. Democrats needed 60 votes to advance that version of the legislation, but it failed on a vote of 45-52.

The continuing deficit fight

Even if the House is able to approve the six-month pay patch, lawmakers would need to revisit the Medicare pay cut issue during the lame-duck Congress after the November mid-term elections, when major legislation traditionally has proved difficult to move.

Republicans countered the Democratic extenders package that included the 19-month plan with a significantly smaller extenders bill that would have deeply cut numerous government programs but featured a longer doctor pay patch. Sen. John Thune (R, S.D.) introduced the plan June 9, which would have increased Medicare rates by 2% through the remainder of the year, and by 2% again in both 2011 and 2012.

But Thune's amendment also failed, on a 41-57 vote on June 17. He had promoted it as a way to provide a much longer-term physician payment solution while cutting overall federal spending.

"My amendment sends a strong signal to the American people -- Washington has a spending problem, and Republicans are going to take steps to fix it," Thune said.

But Baucus responded that Thune's plan, which included significant reductions elsewhere in the budget, would have stunted job growth and left more Americans without health insurance.

"I support finding ways to make our government more efficient, but these cuts are arbitrary," Baucus said. "They are mindless, meat-ax cuts."

As they were attempting to move the stand-alone, six-month physician pay piece, Senate leaders also were trying to obtain unanimous consent on a separate $24 billion provision to provide enhanced Medicaid funding to states. The House measure that passed May 28 had eliminated the extension of the enhanced federal dollar match, but Senate leaders added it back in to their version of the extenders bill.

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