Bush Administration to temporarily keep Medicare physician payment rates at current levels after congress fails to pass legislation to delay scheduled cut

HHS Secretary Mike Leavitt on Friday said that the agency will maintain the current Medicare payment rate for physicians because Congress was unable to pass legislation to avert a 10.6% cut scheduled to go into effect on Tuesday before lawmakers left for the Fourth of July recess, the Washington Post reports. According to the Post, congressional aides said the freeze to payment rates could last 10 days (Kane, Washington Post, 6/28).

A House-passed bill (HR 6331) that would block the reduction to physician fees failed by one vote to receive the 60 votes in the Senate required to gain cloture on Thursday. The House had passed the measure by a veto-proof margin earlier last week. The bill is similar to a measure (S 3101) proposed by Senate Finance Committee Chair Max Baucus (D-Mont.) that also failed to receive enough votes to invoke cloture (Kaiser Daily Health Policy Report [1], 6/27).

Leavitt said he intends to "minimize the impact" of the fee reduction, the New York Times reports. According to the Times, CMS officials said Medicare would hold all new claims for 10 days. As a result, physicians would not experience reduced fees "until July 15, at the earliest," Leavitt said (Pear, New York Times, 6/28). According to congressional aides, a 10-day extension would give senators three days after they return on July 7 from their recess to approve legislation to curb the fee reduction, according to congressional aides.

The White House said that President Bush would have vetoed the House measure and that the Finance Committee was close to working out a compromise that would halt the fee reduction without making cuts to Medicare Advantage, which Bush opposes. The House bill would have cut $14 billion in payments to private health insurers under MA over five years. Leavitt said that if lawmakers are unable to pass legislation blocking the fee cut by the end of the extension, he hopes to pay physicians retroactively after the issue is resolved (Washington Post, 6/28).

Senate Majority Leader Harry Reid (D-Nev.) on Friday in a statement said that Democrats will reintroduce the House bill when lawmakers return from the recess (Marcus, Bloomberg/Pittsburgh Post-Gazette, 6/28).

Democrats Blame Republicans for Failure To Prevent Fee Cut

Democrats on Friday "moved swiftly" to "assail" Senate Republicans for voting against the House measure, the Times reports. According to the Times, Democrats compiled data on each senator's votes on previous Medicare bills and the amount of their campaign contributions from the health insurance industry. The Democratic Senatorial Campaign Committee in news releases targeted, particularly, Republican senators who are up for re-election and voted against the measure, including Sens. John Sununu (N.H.), Lamar Alexander (Tenn.), John Barrasso (Wyo.), Saxby Chambliss (Ga.), John Cornyn (Texas), James Inhofe (Okla.), Mitch McConnell (Ky.) and Roger Wicker (Miss.).

However, Rebecca Fisher, a spokesperson for the National Republican Senatorial Committee, said, "Democrats are trying to mislead voters into thinking it was the Republicans' fault the bill didn't pass." She said it was a lack of bipartisanship that caused the bill to fail. According to the New York Times, the House-passed bill was voted for by Republicans by more than two to one (New York Times, 6/28).

Physician Reaction

Even without the reduction to physician fees, some physicians are debating whether to close their practices, retire early or stop treating Medicare beneficiaries, the Baltimore Sun reports. According to the Sun, doctors in Maryland are also faced with high overhead costs and lower payments from private insurers than elsewhere (Bishop, Baltimore Sun, 6/29). The Pittsburgh Post-Gazette looks at how the "annual dance" over Medicare physician fees affects the ability of doctors to manage their practices. For years -- since the Balanced Budget Act of 1997 -- reductions in fees have been looming for physicians who treat Medicare beneficiaries. However, every year they have been blocked by Congress.

One physician, Melinda Campopiano, said that the prospect that the cuts will not be blocked makes it hard to budget for purchases that would be paid for over many years, such as an electronic health records system. In addition, because private insurers frequently base their payments on Medicare rates, a cut could have a larger effect on physicians, according to the Post-Gazette (Twedt, Pittsburgh Post-Gazette, 6/29).

"Many more physicians will reluctantly retire or reduce clinical practice time," Jack Lewin, CEO of the American College of Cardiology, said, adding, "This hurts access to fragile senior populations" (Abrams, AP/San Francisco Chronicle, 6/30).

DME Competitive Bidding Program

A competitive bidding program for durable medical equipment is scheduled to begin Tuesday because the Senate did not approve the House bill, which contained a provision to delay the program, the Post-Gazette reports (Toland, Pittsburgh Post-Gazette, 6/29). Under the program, CMS will select DME suppliers to participate in Medicare based on bids they submit. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding. In 2008, the program will operate in 10 of the largest Metropolitan Statistical Areas and will apply to 10 of the top DME, prosthetics, orthotics and supplies product categories. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years. The program also will apply to additional product categories in future years. The program likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, according to CMS (Kaiser Daily Health Policy Report [2], 6/27).

Acting CMS Administrator Kerry Weems -- speaking Friday in Pittsburgh, one of the MSAs affected by the program, during a discussion regarding the DME program -- said that about one-fourth of suppliers who submitted bids were selected. However, suppliers that were not picked can subcontract under suppliers that were. Also, some might be "grandfathered" and allowed to continue providing services to existing clients (Toland, Pittsburgh Post-Gazette, 6/29).

Broadcast Coverage

NPR's "All Things Considered" on Friday reported on the Medicare physician fee cut. The segment includes comments from Baucus, Reid, McConnell, Finance Committee ranking member Chuck Grassley (R-Iowa) and American Medical Association President Nancy Nielsen (Rovner, "All Things Considered," NPR, 6/27).