21% Medicare Cut Is Here

21% Medicare Cut Is Here

Despite far too many months of legislative thrashing, the saga of the 21% cut in Medicare and TRICARE payments to doctors is about to take a turn for the worse.

In late May, we reported that the House of Representatives managed to pass a fix as part of the American Jobs and Closing Tax Loopholes Act (H.R. 4213).

The good news is that, unlike the month-to-month fixes Congress has adopted recently, the new House-passed plan would prevent any cuts through the end of 2011, and substitute 2% payment increases for 2010 and 2011.

The bad news is that the House’s delay in passing it until just before the Memorial Day recess caused the Senate to delay the start of its consideration until June 8 – a week after the June 1 implementation date for the 21% payment cut.

Medicare officials came to the interim rescue — announcing they would exercise their administrative authority to hold up processing of new claims for the first two weeks of June, in hopes Congress could pass corrective legislation within that time.

But continued haggling over amendments and costs sent that faint hope crashing, as Senate leaders announced the Senate won’t vote until next week – beyond the date Medicare is allowed to hold up claims processing. And even assuming the Senate gets a successful vote, House and Senate leaders still will have to negotiate a new compromise between their different versions of the bill, and that compromise will have to be approved again by both chambers.

Given that scenario, Medicare will have little choice but to implement the 21% payment cut as of June 15 – retroactive for Medicare-covered service since June 1.

While that’s extremely regrettable, it’s not the end of the world. In fact, the same thing happened in January 2006, when Congressional dithering past the deadline caused Medicare to implement payment cuts. After Congress eventually passed a fix several weeks later, Medicare reprocessed the claims and made retroactive payment increases to doctors.

But Congress’ inaction forced doctors to float an interim loan to the government for the payment differential. And the 2006 cut was only about 4% — a far cry from the current 21% cuts, so doctors are going to be very unhappy.

TRICARE beneficiaries under 65 and their doctors can take some consolation, since this is strictly a Medicare problem, at least for now. That’s because TRICARE normally implements payment changes about a month after Medicare does. So as long as Congress fixes the problem within a month, payments should be seamless for TRICARE.

But the payment delays and administrative hassles can only make doctors more reluctant about seeing Medicare and TRICARE patients alike.

Please send your legislators a MOAA-suggested message to get this extremely unsettling situation fixed – immediately.

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