Senate Agrees to Delay Medicare Reimbursement Cuts


A 23 percent cut in physician Medicare payments was expected to take effect on December 1, 2010. However, the Senate unanimously agreed late last week to postpone the scheduled fee reduction for one month. However, for full approval, the House must still agree to the delay after their Thanksgiving recess.

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The Senate Finance Committee agreed to the short-term fix that will “ensure seniors and military families can continue to get quality health care,” said committee chair Max Baucus and ranking member Charles Grassley in a joint statement. “The next step is moving on to finding a yearlong extension before this fix runs out.”

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The fee cuts were designed in 1997 to be phased in over many years in an effort to control Medicare spending. According to an economic and budget brief written by the Congressional Budget Office in 2006, Part B of Medicare cost the government $158 billion that year with about 38% going toward physician payments for services provided.

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The Sustainable Growth Rate (SGR) formula was to reduce fees by about 4 to 5% annually; however legislation has overridden the formula’s results in the past several years. Unfortunately, this also has an economic impact. The $1billion cost of the deferral will be offset by cutting payments to providers of other healthcare services, including outpatient therapy.

The House of Representatives is out of session until November 29th, but the bill is expected to be approved.