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Congress Seeks to Delay Cuts to Medicare Physician Payments

In June, legislation to delay a 10.6 percent cut in Medicare physician payments — which was scheduled to take effect on July 1 — was approved by the House, despite a presidential vote threat. The bill, HR 6331, is similar to S.3101, which was introduced in the Senate earlier by Senate Finance Committee Chair Max Baucus (D-MT) in June. The Senate bill failed to receive sufficient votes for cloture, the only procedure by which the Senate can vote to place a time limit on consideration of a bill, and thereby overcome a filibuster; 60 votes, or a three-fifths majority are necessary to invoke this process.

At press time, debate on the issue was to take place in the Senate, where a bipartisan agreement will be sought by the leading Democrat and Republican negotiators in favor of blocking physician payment cuts, said Mike Amery, Legislative Counsel for the AAN.


The bill sponsored by SENATOR MAX BAUCUS would have cost about $20 billion over five years and extended physicians an 18-month reprieve from a 10.6 percent pay cut on July 1.

The Medicare Improvements for Patients and Providers Act of 2008 (HR 6331) would grant physicians an 18-month reprieve from a 10.6 percent pay cut on July 1 and provide a 1.1 percent increase in pay to physicians for 2009.

Based on economic projections, if Congress does nothing over the next eight years, this 5 percent annual reduction would add up to a 40 percent drop in physician reimbursement under Medicare, said Amery.

The 18-month reprieve from cuts was intended to give Congress time to consult with doctors and create a long-term solution to the annual reimbursement losses, including replacing the upcoming cuts with payment updates based on rising practice costs.

Among its additional provisions, the Medicare Improvements for Patients and Providers Act of 2008 (HR 6331) would promote electronic prescribing, increase assistance to low-income beneficiaries, and reduce the co-payments for mental health services from 50 percent to 20 percent. It would also would delay a competitive bidding program for suppliers of medical equipment and repeal a competitive bidding program for medical laboratories. To help offset the bill's cost, it would also reduce spending on Medicare Advantage, health insurance plans offered by private, fee-for-service insurers such as Humana and UnitedHealth, which some seniors use instead of Medicare.

According to Amery, Senator Charles Grassley (R-Iowa), the ranking member of the Senate Finance Committee and the lead negotiator on the Republican side for the physician reimbursement fix, had introduced a similar bill (S. 3118), which the Senate has not voted on. Sen. Grassley has said he will urge both parties to settle on a compromise that will not draw a presidential veto.

Since both sides of the Senate negotiating table are not that far apart in terms of provisions, Amery said, there's a chance a compromise can be hammered out. But there's no question an agreement needs to be reached, because without Congressional action, the 10.6 percent pay cut “would be disastrous to medical practices,” said Amery, and neurologists — many of whom practice in small settings — will be forced to limit the Medicare patients they see because of lower revenues in the face of rising practice costs. Many doctors may choose to stop accepting new Medicare patients, which will compound the difficulty of patients' access to heath care as more Americans turn 65 and begin using Medicare plans.

The 10.6 percent cut would be applied to every CPT code physicians bill for services. For example, for an office visit (level 4 evaluation and management (E/M) 99214), a commonly billed code by neurologists, the current national average Medicare payment is $89.90, explained Amanda Becker, associate director of medical economics at the AAN Professional Association (AANPA).

“If the cut goes into effect on July 1, the payment for that service would go down to $80.42.” She added: “Many insurance plans pay higher for a service than Medicare does. Insurers tend to base their payments on a percentage of what Medicare pays, so when Medicare payments take a hit, we can expect private payers to follow suit.”

David Charles, MD, chair of the AAN Legislative Affairs Committee, said it is vital that AANPA members notify their senators about the urgency of this issue to the practice of neurology and to its patients. Neurologists can find Congressional phone numbers or send a pre-drafted letter at the Academy's online advocacy Web site: Or they can be connected to their senators' offices by calling the AMA Grassroots Hotline at (800) 833–6354.