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CMS Delays Physician Pay Cut in Hopes that Congress Will Resolve Issue

Joe Cantlupe, for HealthLeaders Media, March 1, 2010

Lacking congressional action, the federal government has essentially halted a 21.2% Medicare pay cut for physicians that was to go into effect today.

The Centers for Medicare and Medicaid Services has ordered contractors to hold claims for 10 days, which temporarily shelves the Medicare pay cut. CMS expects that provider cash flow will not be interrupted.

The CMS took the action after the Senate failed to extend the pay cut plan and went home for the weekend on Friday, says CMS spokesman Peter Ashkenaz.

Physician organizations are furious at the Senate for failure to vote to delay the pay cut and opting for adjournment instead. The Senate may attempt to take up the issue again on Tuesday, according to physician organizations. Last Thursday, The House passed a bill to delay the pay cut for 30 days.

"I appreciate that CMS will not be processing claims [today]," says Lori Heim, MD, president of the American Academy of Family Physicians. "Obviously, CMS thinks they will be able to have this fixed within the 10-day period. A lot of physicians are barely making anything on Medicaid [related practices]," she says. "Our members can't survive on a 21% pay cut that would be totally unacceptable.'"

After the Senate recessed Friday, CMS issued a guidance acknowledging potential congressional action.

"We believe Congress is working to avoid the negative update that will take effect March 1, 2010," the guidance stated. "Consequently, CMS has instructed its contractors to hold claims containing services paid under the [Medicare Physician Fee Schedule] for the first 10 business days of March."

The guidance added: "The holding of MPFS claims will only affect claims with dates of service March 1, 2010 and forward. This hold should have a minimum impact on provider cash flow because, under current law, clean electronic claims are not paid any sooner than 14 calendar days [29 for paper claims] after the date of receipt."

The physician pay cut issue has been dependent continually on congressional action, much to the consternation of physicians. On Dec. 19, Congress voted to delay the scheduled payment cut until March 1.

Specifically, the Medicare payments were scheduled to be cut across the board in accordance with the sustainable growth rate (SGR) formula. The proposed delay ostensibly is to give Congress time to adjust the SGR formula. SGR links Part B Medicare reimbursement to the gross domestic product (GDP). The formula has required large cuts annually over the most decade and physicians have worked to continually oppose them.

"The practical impact of the cut taking effect will be serious but not devastating as long as the Congress addresses this untenable situation the week of March 1 as expected," wrote Bob Doherty, vice president of governmental affairs for the American College of Physicians (ACP) on the ACP blog Friday following the Senate's failure to act.

"If Congress acts promptly to extend the current rates—and specifies that the extension is retroactive to claims for services from March 1, ACP understands that Medicare contractors will pay claims the correct, continued-rate amount the first time," Doherty said.

"The downside is that many physicians will likely notice that Medicaid payments for services provided in early March will arrive a few days later than typical," according to Doherty.

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