U.S. House Backs One-Month Delay of Reduction in Doctor Pay Under Medicare

A one-month delay of a planned 23 percent reduction in doctors’ Medicare pay rates was approved by the U.S. House of Representatives, providing more time for lawmakers seeking to hold off future cuts.

Medicare, the U.S. government health-insurance program for the elderly and disabled, has cost control formulas that demand the rate cuts. The House voted today to postpone the reduction until Jan. 1 from Dec. 1, clearing the way for President Barack Obama to sign legislation that passed the Senate Nov. 18.

The one-month postponement will cost $1 billion, paid for with savings from planned cuts in Medicare reimbursement for therapy services, according to an agreement struck by Senator Max Baucus, a Montana Democrat who chairs the Senate Finance Committee, and Senator Charles Grassley of Iowa, the committee’s senior Republican.

“This short-term delay helps ensure that physicians can continue to care for seniors for the next month,” Cecil Wilson, president of the Chicago-based American Medical Association, said in an e-mail.

Physicians may withdraw from Medicare if the scheduled cuts are imposed, the doctors’ group said in a Nov. 15 statement.

The formula that governs doctor payment rates began calling for cuts in 2002, according to the Congressional Budget Office. In 2003, Congress stepped in and blocked the annual pay reduction. Since then, lawmakers each year have stopped the planned rate cuts. The American Medical Association is among the groups that want Congress to create an alternative formula to replace the current system.

Photographer: Mario Villafuerte/Getty Images

Medicare has cost control formulas that demand doctor pay rate cuts. Close

Medicare has cost control formulas that demand doctor pay rate cuts.

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Photographer: Mario Villafuerte/Getty Images

Medicare has cost control formulas that demand doctor pay rate cuts.

Physician Payments

Medicare covers about 46.6 million people, according to the Kaiser Family Foundation, a nonprofit research group based in Menlo Park, California. Payments for physician services will account for 13 percent of the $509 billion the program will spend on medical benefits this year, according to the foundation’s analysis of U.S. government projections.

The formula that determines how much Medicare pays doctors is designed to reduce total spending from year to year by linking rates to overall economic growth. The scheduled fee cuts have climbed to 23 percent from the proposed 4.8 percent reduction in 2002. Delaying next year’s cut until 2012 would cost taxpayers at least $15.4 billion, the Congressional Budget Office estimated in April.

Obama supports postponing the physician fee cut until 2012 and enacting a new method of setting rates, Health and Human Services Secretary Kathleen Sebelius said Nov. 8.

To contact the reporter on this story: Jeffrey Young in Washington at jyoung89@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

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