Congress Overrides Presidential Veto, Postpones Medicare Physician Pay Cuts for 18 Months

By James Arvantes • Washington
7/16/2008

Congress has overridden President Bush's veto of a Medicare payment bill and enacted legislation that postpones steep reductions in the Medicare physician payment rate this year and next.

In successive votes on July 15, the House and then the Senate easily overrode the president's veto of H.R. 6331, (at the THOMAS Web site, type "H.R. 6331" in the search box after selecting "Bill Number") enacting legislation that maintains current funding levels for the rest of this year while providing a 1.1 percent payment increase in 2009. The legislation essentially rescinds a 10.6 percent payment reduction that went into effect on July 1, while blocking a 5.4 percent cut that was scheduled to take place in 2009.

CMS Resumes Paying Claims at Higher Rate

Congress' override of the presidential veto of the Medicare payment bill means CMS can resume paying Medicare claims at the rate paid before the 10.6 percent payment reduction went into effect July 1.

The agency was forced by law to begin paying claims at the -10.6 percent rate as of July 15. According to CMS, (1-page PDF; About PDFs) physicians should begin to receive payments at the rate in effect before July 1 in approximately 10 or fewer business days as Medicare contractors update their payment systems with the new rate.

CMS notes that after local contractors have updated their payment systems, they will begin automatically reprocessing any claims paid at the lower payment rate. Claims with dates of service on or after July 1 that were billed at the payment rate in effect before July 1 will be reprocessed automatically. Claims that were billed at the -10.6 percent payment rate will require that providers contact their local contractor for direction on obtaining adjustments, says CMS. Nonparticipating physicians who submitted unassigned claims at the reduced nonparticipation amount also will need to request an adjustment.

For more information, visit the AAFP's "Medicare Participation Options for Physicians" Web page.

"We are extremely pleased that Congress has overridden the veto to protect senior citizens and to continue allowing primary care physicians to provide Medicare services," said AAFP President Jim King, M.D., of Selmer, Tenn., in an interview with AAFP News Now.

Although President Bush agreed with the intent of H.R. 6331, he and some of his Republican allies on Capitol Hill disagreed with proponents of the bill on how to pay for the measure.

The legislation primarily pays for the update by reducing subsidies to private fee-for-service plans under Medicare Advantage, Medicare's managed care program, and by cutting payments to indirect medical education, or IME, plans that duplicate IME payments made to hospitals.

The cuts to the Medicare Advantage private fee-for-service plans would not directly impact beneficiaries or even physicians, because the plans usually pay the same amount as traditional Medicare fee-for-service plans. But the Bush administration opposes any cuts to Medicare Advantage, and in a July 15 written statement to the House, Bush said the legislation "would harm beneficiaries by taking private health plan options away from them."

During a July 15 Medicare rally on Capitol Hill, members of the House and Senate said a cut in physician payment rates would end up denying health care access to seniors. "That is not right," said Sen. Pat Roberts, R-Kan., during the rally, which was heavily attended by AARP members. "That is why both Republicans and Democrats are joining together to support this bill."

Photo of Sen. Pat Roberts, R-Kan., at a Washington news conference on Medicare legislation

Sen. Pat Roberts, R-Kan., tells AARP members at a July 15 Medicare rally in Washington that cutting physician payment rates would end up denying health care access for seniors.

Rep. John Dingell, D-Mich., chair of the Energy and Commerce Committee, was even more blunt, telling the audience that "if they dry up the supply of doctors by not paying them, there will not be any Medicare."

The enactment of H.R. 6331 caps a long and tortuous process that began last year. In late December, Congress passed a six-month payment update that postponed reductions in the Medicare payment rate until July 1. Although the House passed H.R. 6331 in late June, the Senate did not approve the measure until July 9, eight days after the 10.6 percent reduction went into effect.

"Each year, we have to go through this time-consuming and painful process of lobbying legislators to come up with a way to prevent (Medicare) cuts," said King. "We are hoping that this is the last time we will have to do this."

H.R. 6331 provides an 18-month payment update, giving Congress enough time to develop a suitable alternative to the sustainable growth rate, which is the formula used to set Medicare payment rates.

"We are hoping Congress will sit down and work with the Academy and other organizations to come up with a payment formula that makes sense and one that makes sure senior citizens receive the care they need," said King.

H.R. 6331 also contains the following provisions:

an extension of the Physician Quality Reporting Initiative, including a 0.5 percent increase in the bonus payment in 2010;
incentives to encourage adoption of electronic prescribing;
an additional $100 million for a medical home demonstration project CMS plans to launch next year;
extension of the floor of the Medicare Work Geographic Physician Cost Index, which is designed to mitigate funding losses resulting from geographic variances; and
a 5 percent increase in payments for mental health services.

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