Medicare cuts for physicians loom, yet again

A 21 percent reduction in Medicare reimbursements that has loomed over physicians all year will go into effect on June 1, unless Congress acts to further delay the cuts, CNNMoney reports. "If the proposed cuts go through, physicians are worried their practices will be so strapped that they'll have to drop some of the 43 million Americans who are covered under Medicare." But, the interests of physicians and Medicare beneficiaries are competing against a cash-strapped federal budget. Congress has deferred past scheduled cuts but "delaying cuts merely kicks an existing problem down the road" (Pepitone, 5/17).

The history of the cuts go back to the late 1990s, the Fort Worth Business Press reports. "Congress decided to change the way Medicare reimbursed physicians by creating the Sustainable Growth Rate, which attempted to cut down on variable reimbursement rates and control government spending on health care. ... Under the SGR, reimbursement rates are slated to be cut, but every time the cuts come around, Congress delays them for anywhere from several months to a year." That uncertainty has had a chilling effect on physician practices, which find it difficult to plan their finances without knowing what Medicare will pay them. "The retroactive delay of reimbursement cuts earlier this year caused a major cash flow problems for physicians because [the Centers for Medicare and Medicaid Services], which oversees Medicare carriers, instructed those carriers to hold physician claims for 10 days until Congress came back from a weekend and made a short-term fix" (Bassett, 5/17).

American Medical News: "Congress has used extenders bills as vehicles to enact the most recent short-term patches to the Medicare pay cut. The legislation also extended various unemployment and health assistance programs that had expired. With those programs set to expire again, another such bill might offer a chance for a more substantial SGR solution." The American Medical Association says in a recently released advertisement that each time the cuts are patched temporarily, the cost of a more permanent fix increases. The ad "features a child contemplating a growth chart listing projected costs of an overhaul. If lawmakers do not act now, the ad states, the cost of a permanent overhaul will jump to $396 billion in three years, and to $513 billion in five years" (Silva, 5/17).

The latest "extender" bill may also be used to force drugmakers "to offer more discounts for hospitals that treat the poor," The Hill reports. "The provision was excised at the last minute from the health reform bill under pressure from the pharmaceutical lobby but it has bipartisan support in the House and Senate. The provision is part of a short 'wish-list' of health provisions that Democrats still hope to pass this year, said a Republican health policy consultant. The tax extenders package is seen as the last best shot to get it done" (Pecquet, 5/15).

Also, on a different issue being considered on Capitol Hill, CongressDaily reports, "Sen. Dianne Feinstein, D-Calif., said Thursday it was a possibility her bill to establish a federal board to approve insurance rate increases could be attached to the tax extenders package in the House" (Swindell and Cohn, 5/17).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.