Scheduled 21% Pay Cut for Physician Services to Medicare Beneficiaries Delayed 30 Days

On March 2, the US Senate once again delayed enacting a scheduled 21% payment cut for physicians who provider Medicare services. The lopsided vote, 78-19, concerns the Temporary Extension Act of 2010 (H.R. 4691), and includes extensions to unemployment benefits, and also applies to members of the military on the federal government’s TRICARE insurance.

Physicians have come to expect a reimbursement cut of varying amounts annually, but Congress usually delays or reverses the cuts. In their previous session, however, Congress merely postponed the 21% cut until March 1. Extensive lobbying and pure history have left physicians expecting Congress to reverse the cut, as it has done in prior years, but this additional delay has left many wondering and worrying.

At issue is what physicians and the American Medical Association (AMA) say is a flawed formula, called the sustainable growth rate (SGR), that sets an annual target for Medicare spending on physician services. Physicians whose practices are largely Medicare patients, such as geriatricians, and cardiologists who faced a separate reimbursement cut earlier from Medicare, will be particularly hard-hit by this cut.

Votes in February

On Thursday, February 25, the US House of Representatives voted to delay the overall physician cut, but after the US Senate failed to act. Consequently, on Friday, February 26, the Centers for Medicare and Medicaid (CMS) notified their contractors to hold off processing Medicare claims from physicians for 10 days. A similar action was taken in 2008 when the Medicare cut of 10.6 percent that year went into effect before Congress later froze it. The pending claims then did not have to reflect the 10.6 percent cut.

Cardiologists Lose Lawsuit

In December, 2009, The American College of Cardiology (ACC), which represents 90% of the roughly 40,000 heart specialists in the USA, filed a lawsuit against the Department of Health and Human Services (HHS) for the 2010 scheduled reductions in Medicare for certain cardiology services. This cut assumes that the cost of providing cardiology care has fallen 40% over five years.For example, cardiologists may see payments for nuclear stress tests cut by as much as 36%. The suit asked the court to block HHS from making the cuts, which ACC claimed were based on flawed data, largely based upon data provided by Hospitalists — physicians who work for hospitals and do not have to buy the equipment they need for their own private practices. The suit argued, therefore, that the Physician Practice Information Survey CMS uses doesn’t fairly represent physicians’ costs. ACC members claimed that most members saw a 2% increase in overhead during 2009 alone. CMS concluded from the survey data that most physicians could fairly absorb the reimbursement cuts.

In a December USA Today article, Jack Lewin, CEO of the ACC, said, “What they’ve done is basically killed the private practice of cardiology.” Jonathan Blum, director of the government’s Center for Medicare Management, said CMS was bound by law not to increase spending when making reimbursement decisions each year. Blum said the agency must rob Peter to pay Paul — or rob the cardiologists to pay the internists and family physicians — to boost payment rates for “long undervalued primary care services”.  Blum confirmed that the agency relied on a survey showing that the cardiologists can absorb the payment cuts. The ACC lawsuit claims the survey was flawed and unrepresentative of their members’ real costs.

Nevertheless, within a few weeks, ACC’s lawsuit was dismissed by the U.S. District Court of Southern Florida, although the court ruled that it didn’t have the authority to review Medicare payments, as reported by Fierce Healthcare on January 19.

Read the ACC’s statement on the Medicare lawsuit.