CMS delays claims processing while Congress looks for payment fix

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On top of a call to reduce the 2009 Medicare physician payments by another 5.4 percent, the Centers for Medicare & Medicaid Services (CMS) said it will not process any claims for the first 10 days in July, a move that gives Congress a chance to finalize or change a mandated 10.6 percent reimbursement reduction that went into effect July 1.

By holding claims for healthcare services that are delivered on or after July 1, CMS will not be making any payments on the 10.6 percent reduction until July 15, at the earliest. ??

On June 24, the U.S. House of Representatives passed the Medicare Improvements for Patients and Providers Act, by a veto-majority vote of 355-59, seeking to prevent the looming 10.6 percent physician payment cut called for by Medicare’s sustainable growth rate (SGR) formula that was set to go into effect July 1. Yet, the Senate fell two votes short of the 60 needed for passage on June 26.?

The failed Senate bill calls for delaying payment cuts for 18 months and increase payments by 1.1 percent in 2009. 

“It is critical that Congress take action to replace the next 18 months of cuts with positive updates based on practice cost increases,” said the American Medical Association (AMA) in a press release.

An AMA survey revealed that 60 percent of physicians reported that they would have to limit the number of new Medicare patients they treat if payments are cut 10 percent in 2008. More than half of physicians report that they cannot meet their payroll and will have to reduce their practice staff.

The government has typically initiated eleventh hour “fixes” to stop physician payment reductions mandated by the SGR. In fact, last December, President Bush signed the Medicare, Medicaid and SCHIP Extension Act of 2007, which prevented a 10.1 percent reduction in physician payments that was scheduled for 2008. The legislation instead gave physicians a 0.5 percent increase through June 30, 2008.

The current 10.6 percent reduction that when into effect July 1 is a result of the scheduled 10.1 percent reduction, along with the rescinded 0.5 percent increase.

Many physicians and analysts say the SGR, which is linked to gross domestic product (GDP), is a flawed methodology and have called for its overhaul.

“SGR should be discontinued and replaced by a new system that provides for normal economic incentives that are relevant to the individual clinical situation,” wrote John S. O'Shea, MD, last year while a Health Policy Fellow at The Heritage Foundation. 

Senate Democrats, in the meantime, are looking for a way to craft legislation that will garner enough Republican votes to override a Presidential veto. President Bush has said he will veto any Medicare bill that targets Medicare Advantage, which the failed Senate bill does.

Public comments can be made on the proposed final rule until Aug. 29.  CMS will issue the final rule by Nov. 1, and the new payment rates will become effective Jan. 1, 2009.