Congress Votes Six-Month Delay in Threatened Medicare Cut

As in past years, Congress stepped in at the last minute to avert a deep cut in overall physician payment under the Medicare program—at least for a while.

On December 18, just days before the congressional Christmas break, the Senate Finance Committee approved a 0.5 percent increase in overall payment to last until June 30. That's a six-month reprieve from an impending 10.1 percent overall cut originally proposed by the federal Centers for Medicaid and Medicare Services (CMS).

The measure (S 2499) was part of a package that included reauthorization of the State Children's Health Insurance Program (see Original article: Final SCHIP Renewal Bill Fails to Expand Access). The legislation was approved by the full Senate later the same day and by the House of Representatives the next day.

At press time, the measure was expected to be signed by President George Bush.

The proposed cut was the largest yet by CMS, the result of the payment formula for Medicare requiring the program to be budget neutral from year to year despite increases in volume. In past years, CMS has proposed significant cuts in physician payment in Medicare, only to have Congress intervene and provide a payment increase at the last minute.

According to the measure passed by Congress last month, the original 10.1 percent cut will go into effect on July 1. APA's Department of Government Relations and Office of Healthcare Systems and Financing cautioned that payments to individual psychiatrists may still go up or down depending on individual practice and coding patterns.

On December 18, 2007, Sen. Charles Grassley (R-Iowa), ranking minority member of the Finance Committee, said in a statement released after the committee's action that he and other lawmakers had hoped to approve a two-year increase in physician reimbursement, but had been unable to find mechanisms to pay for it.

And he said the six-month period would give the committee time to revisit the issue of Medicare payment later in 2008.

“When discussions began to solve this problem, I was in favor of a two-year update,” Grassley said. “Unfortunately, for a variety of complex reasons we are now here with a much more limited package. This is a disappointment for many of us. So the purpose of moving forward with a six-month package now is to provide the opportunity for the Finance Committee to address these priorities [in 2008].”

The physician payment fix and other measures in the bill will be paid for by cuts in a “Medicare stabilization fund,” a fund established under the Medicare prescription drug program to attract preferred-provider organizations to underserved areas; cuts in payments to hospitals for inpatient rehabilitation services; reductions in physician payment for drugs administered by physicians in their office; and adjustments in other Medicare provisions.

Physician groups, including APA, welcomed the payment revision but lamented that the original CMS proposal to cut payments will go into effect in just six months. And once again they called on Congress to provide a permanent fix to the Medicare payment formula, and especially its so-called sustainable growth rate component.

Edward Langston, M.D., chair of the AMA Board of Trustees, in a statement released after the Senate action hailed Grassley and other senators who had helped forge the agreement.

But, he added, “We are disappointed that the Senate could only agree on a six-month action because it creates great uncertainty for Medicare patients and physicians. We strongly urge Congress to break the tradition of short-term interventions that are not fully funded and fail to chart a course for replacing a flawed payment formula that is a barrier to improving quality and access to care for seniors.”

In another Medicare-related issue, Nicholas Meyers, director of APA's Department of Government Relations, said that CMS was planning to extend the deadline for physicians who wish to change their participation status, and he added that it was possible that Congress would next year extend the update beyond the June 1 deadline.

“The six-month 'reprieve' is welcome news,” he told Psychiatric News. “We are advised that CMS will extend the December 31, 2007, deadline for physicians who wish to change their participation or nonparticipation status under Medicare for 45 days (until mid-February), and if, as expected, Congress extends the 0.5 percent positive update from July 1 through December 31, it is possible that CMS will provide another opportunity for physicians to change status.”

A summary of the bill passed by the Senate Finance Committee is posted at<www.senate.gov/~finance/sitepages/leg/LEG%202007/Leg%20110%20121807med&schip.pdf>.▪