Medicare doctor pay freeze until 2014 — 26.5% cut averted

Washington Congress on New Year’s Day stopped a massive reduction to Medicare doctor payments by freezing rates at 2012 levels for one year.

Late on Jan. 1, the House voted for a measure the Senate approved early that morning that overrides a 26.5% cut to Medicare pay that technically went into effect at the beginning of the day. The bill preventing the steep reduction in pay for services passed Congress as part of a larger legislative package that also extends certain tax cuts and postpones across-the-board spending reductions.

President Obama had urged Congress to adopt the compromise bill and said he would sign it into law, meaning the Medicare rate cut will not apply to any 2013 claims.

The patch alleviates the problem only temporarily, said American Medical Association President Jeremy A. Lazarus, MD. Congress delayed the cut until 2014, when payment rates will be reduced by about 25% without further congressional action, according to current projections. The unstable Medicare pay system must be dealt with permanently over the coming months, Dr. Lazarus added.

“This last-minute action on the part of Congress is a clear example of how the Medicare program is increasingly unreliable for physicians and patients,” he said. “This instability stalls progress in moving Medicare toward new health care delivery models that can improve value for patients through better care coordination. Physicians want to work with Congress to move past this ongoing crisis and toward a Medicare program that ensures access to care and the best health outcomes for patients, and a stable, rewarding practice environment for physicians.”

The package also delays by two months a separate 2% cut to Medicare physician pay mandated under the automatic spending reduction process known as budget sequestration. Congress must act again by March 1 if it wants to prevent that reduction from taking place.

Spending reductions in other areas of Medicare were used to offset the $25.2 billion cost of stopping the sustainable growth rate cut for 2013. An inpatient prospective payment system adjustment cuts $10.5 billion from hospitals from 2014-18. Revisions to how Medicare calculates bundled payments for end-stage renal disease treatments would save $4.9 billion over 10 years. An expansion of the Medicare payment policy that pays less for multiple therapy services provided to the same patient on the same day secures another $1.8 billion for the program, while another provision reduces pay by $800 million for advanced imaging services. Rebasing state disproportionate share hospital payments in 2022 would produce another $4.2 billion in federal health savings.

The legislation also extends several Medicare payment provisions that were set to expire on Dec. 31, 2012. A $500 million increase to physician rates for doctors working in low-cost states will continue until 2014. Exemptions to caps on therapy services also were extended through the end of 2013.