Medicare Payment Cuts Finally Resolved Heading Into New Year

By Author: Ruskin Booth
Total Articles: 14
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At the end of November Congress had agreed to a one month delay in cuts to Medicare reimbursement rates for doctors.

“It was a short-term reprieve to the 23 percent cut that was supposed to take place on December 1,” noted Alan Weinstock, an insurance broker at MedicareSupplementPlans.com. “The hope, naturally, was that lawmakers would take this month to come up with and agree to a longer-term plan that would overhaul the Medicare system.”

This is a system that has caused consternation in Congress, angered doctors and jeopardized the Medicare coverage for millions of elderly and disabled Americans. The White House wanted a one-year fix for the Medicare system so lawmakers could determine how to permanently fix the budget formula for the program.

Impact of the One-Month Short-Term Delay

The short-term delay provided much needed time so physicians could continue to care for seniors and Congress could take action to ensure that Medicare continues to deliver much needed health coverage for millions of seniors.

According to the American Medical Association, if the reimbursement rate formula ...
... isn’t fixed by January 1, 2011, the reduction to physician reimbursement payments would likely be around 25%.

Resolution of Projected Medicare Pay Cuts

The good news is that the Senate came through and unanimously approved a one-year delay of the scheduled cuts to physicians’ Medicare payments. Within days, the House followed suit and unanimously passed it as well.

Then barely two weeks before the end of the year, President Obama signed into law the legislation that delays for one year a cut in Medicare pay to doctors. The reductions are designed to keep Medicare spending in check.

The cost of this new measure has been estimated at 14.9 billion over the next 10 years and would extend current Medicare reimbursement rates until 2012. The full package includes extensions to several other expiring Medicare programs. The Congressional Budget Office indicated that the entire package is fully funded.

Most of the cost of the Medicare program would be offset through changes in the federal health reform law related to health coverage subsidy overpayments, though the legislation would be funded in part by the Medicare Improvement Fund as well.

In 2014, certain individuals and families will be eligible for tax subsidies to cover their health coverage costs through health insurance exchanges. Those who receive tax subsidies that are larger than they are eligible for then have to repay the federal government a portion of that subsidy. That works out to be as much as $250 for individuals and $400 for families. The new bill would change the repayments to a sliding scale structure based on the income levels of recipients.

Now it’s Time to Work on Long-Term Solution

While the one-year delay is good news for Medicare beneficiaries and the doctors who provide services to them, a permanent solution to the Medicare physician payment rate issue is still pending.

As it currently stands, the payment formula -- originally intended to lower costs by annually resetting physician payment rates – still needs a long-term fix. When those physician cuts are deferred, they accumulate and force lawmakers to do a MacGyver on the system.

So it will be up to the Congress and White House Administration to come up with a more permanent solution before the end of 2011.

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