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Temporary? A 21% cut in pay for Medicare doctors

June 21, 2010

Starting today, the Center for Medicare and Medicaid Services (CMS) is paying 21% less to doctors for treating  medicare patients.  The cut is part of a saga that’s been going on for years.

Back in the 90s, Congress passed a law to control medicare spending. Put simply, it said that the amount medicare spends shouldn’t increase faster than the growth of the economy.

Everyone who’s experienced a double digit rate increase knows that health care costs increase faster than inflation.  And so, this law started to require some pretty substantial cuts in the payments doctors expected.

Since then, congress has continued to temporarily repeal the cuts.  Now we’re up to a 21% cut in payments.

For a great explanation by NPR’s Planet Money (the story ran in February, when congress was working on ANOTHER temporary fix) go here.

The latest last minute repeal ended on June 1st.  The Senate has approved another fix until November, but the House isn’t making any promises about approving the extension.

CMS says it can’t wait till then. It’s been waiting since June 1st to pay doctors, and it’s obligated to start processing their claims.  So, CMS is paying doctors with the 21% cut and expect to pay them back when the house approves an extension.

Doctors across the country are getting agitated by the back and forth.  Here in Rhode Island, the physicians I spoke to say the confusion and delay around payments is making it harder to treat medicare patients. Every time Congress delays another extension, CMS stops processing claims for weeks. The payments come sporadically and unpredictably.

Many believe they’ll have to refile their claims to recoup the 21% cut, although a spokesperson with CMS told me the reprocessing will be automatic.

Doctors most affected by this cut will likely be primary care doctors, who don’t get paid as much as specialists and might not have the savings to float them through temporary cash flow interruptions.  Of course, it all depends on how many medicare patients they treat.

It’s likely the house will eventually approve what’s been called the “doc fix” but the real question is, when will lawmakers find a permanent solution?  Either they dismantle the cost saving measures and end up continuing to pay more and more each year for medicare, or one day they let the cuts happen for good.  Considering the outcry over what might be less than a week of large cuts, that seems unlikely.

But perhaps there’s a third way? Dismantle the large cuts but phase in something more gradual? What do you think?

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