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Payment Formula

Medicare Doctors Face Pay Cut—Again

Senate passes measure but "doc fix" must go to House

doctor in the house?

Thinkstock/Getty Images

A cliffhanger that has played out in Congress over recent weeks came to a denouement of a kind today when the Senate finally acted to stave off a scheduled 21 percent cut in Medicare payments to doctors. It postponed the cut for six months and increased payments by 2.2 percent for that period. But the cut has already gone into effect and cannot be lifted unless the House of Representatives votes to endorse the Senate bill. A vote is expected next week.

The Senate development disappointed physicians who wanted a longer delay, and it did little to ease consumer fears that more doctors will stop taking Medicare patients while they remain uncertain whether the pay cuts will again be postponed at the end of the year. “Congress is playing Russian roulette with seniors’ health care,” AMA President Cecil B. Wilson, M.D., said in a statement today. “Already the instability caused by repeated short-term delays is taking its toll.”

The situation affects not only physicians but also millions of patients enrolled in Medicare and TriCare, the health program for military families that ties its payment rates to those of Medicare. A series of Band-Aid solutions "creates a dangerous atmosphere for seniors and their doctors," says AARP Executive Vice President Nancy LeaMond. “Finding a physician is already a challenge for older Americans."

Cuts go into effect

The massive pay cut was supposed to kick in Jan. 1, but was postponed until June 1. Just before the Memorial Day weekend, the House passed a bill that would delay the cut for 19 months, but the Senate failed to act. The Medicare agency then used its administrative authority to freeze payments to doctors through June 17 to give Congress more time to avert the cuts. When that grace period expired yesterday, Medicare began processing doctors’ claims at a rate that reflects the 21 percent pay cut. This will continue, officials say, until the House acts.

This “doc fix” scenario, as it’s called in Washington, has occurred every year for nearly a decade. Under a law passed in 1997, Medicare rates for physicians and other providers are calculated under a complex formula that was designed to curb the growth of Medicare costs, but later resulted in cuts so unpopular that Congress has annually postponed them. The legal requirement remains, however, swelling the cuts cumulatively to reach 21 percent this year.

Physicians say that even with Congress enacting this latest fix, it will not necessarily prevent doctors from limiting the number of Medicare patients they treat or opting out of the program altogether unless the current payment formula is repealed. President Obama has also called for a permanent fix. Doctors “shouldn’t have this guillotine hanging over their heads every year,” he told a town hall meeting of seniors last week.

Doctors limit Medicare patients

Nearly one-third of primary care physicians say they have already been forced to cut back on the Medicare patients they see, according to a recent survey of 9,000 doctors conducted by the American Medical Association. More than eight in 10 said it was because of the ongoing threat of future payment cuts.

That threat creates a “financially unstable situation” that affects a typical primary care practice in many ways, says Fred Ralston Jr., M.D., president of the American College of Physicians. “It’s difficult to recruit new doctors, it’s horrible for morale, and it’s harder to borrow money to invest in improvements for your practice when the possibility of having the rug pulled out from underneath you is always there,” he says.

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