UPDATE: Senate Agrees to Delay 21 Percent Medicare Payment Cut

UPDATE: Lawmakers reached an agreement Friday to delay the 21 percent reduction in Medicare claims reimbursements, on the day the cuts were scheduled to going into effect. The compromise bill will now go onto the House of Representative for approval.

The latest "doc fix" proposal will delay the Medicare payment cuts through December, and provide a 2.2% increase in payments until Nov. 30. The increase will be offset by cuts to other healthcare programs.

An amendment proposed by Sen. Max Baucus (D., Mont.) that would have delayed the cuts until 2012 was defeated Thursday after Democrats failed to get the necessary 60 votes. (The final vote count was 56-40.) It was the second time this week lawmakers failed to avert the 21 percent pay cut.

An earlier amendment extending the increase over 19 months was defeated. The five-month extension cut the total cost of the legislation to $118 billion from $140 billion, and reduced the impact on the federal deficit to $55 billion from $79 billion. The Centers for Medicare and Medicaid Services had been holding off processing Medicare claims until Thursday, in the hope lawmakers would reach an agreement to delay the 21 percent cut retroactive to June 1 -- the most recent extension deadline for the cuts. CMS contractors began processing claims with the 21 percent reduction Friday, though physicians may eventually receive the full reimbursement if lawmakers agree to a retroactive fix to the sustainable growth rate.

"Frustration and Anger Is Understandable"

The American College of Physicians said in a statement Friday that it expects Congress to act in the near-term by enacting a fix that is retroactive to June 1.

“The ACP realizes that the reduction in payments, even if temporary, creates havoc for practices and the fact that Congress has already enacted three short-term patches to delay payment cuts compounds the problem. The situation is unacceptable and the frustration and anger is understandable,” according to the statement.

The College is urging lawmakers to guarantee no cut in payments for at least three and half years, “to allow the healthcare system to transition to more-permanent system for determining annual Medicare payment updates.”

In his popular blog Dr. Wes, cardiologist Westby G. Fisher, MD, predicts practices will be forced to downsize or merge in response to the Medicare payment cuts. Healthcare professionals in bigger organizations will also suffer.

“Big hospitals and health systems with lots of doctor-employees will point to the decreased revenue by their doctors, tighten their belts a bit more by maintaining their months-long hiring freezes indefinitely, and fail to give those productivity bonuses to their workers as their construction contracts for their additions continue to get paid as they get ready for the ‘Big Wave’ ”, he wrote, referring to baby boomers.

Cecil B. Wilson, MD, the new president of the American Medical Association, said physicians will be forced to make difficult choices to keep their practice doors open.

A May survey of 9,000 AMA members found that one in five physicians are considering restricting the number of Medicare patients in their practice, and nearly one-third of physicians in primary care already do. The main reasons cited were that Medicare payments were too low, and that the threat of future payment cuts made Medicare an unreliable player.

“Delaying the problem is not a solution,” Dr. Wilson said in a statement. "Continued short-term actions are creating severe instability that harms seniors as physicians make decisions to protect their practices from Medicare’s volatility. Continuing down this path just slaps a Band-Aid on a problem that needs urgent surgery."