21.3 percent Medicare pay cut goes into effect

Senate sends short extension, positive update to House

posted 06.18.10

The Centers for Medicare and Medicaid Services began processing Medicare physician claims under the 21.3 percent cut on Friday, June 18, after Congress failed to take action to prevent it. The negative update technically went into effect on June 1, but CMS ordered contractors to hold claims for 10 business days, awaiting congressional action. On June 14, CMS extended the hold for an additional three business days. With no options left, CMS announced Friday that they would begin processing claims under the law’s negative update on a first-in, first-out basis.

H.R. 4213, the original bill that contained a temporary extension of the SGR, failed to make it to a final vote in the U.S. Senate after Senate leaders couldn’t muster support for legislation that would add billions to the federal deficit. One amendment to the House-passed version of the bill that would have offered a 19-month reprieve from the cut was also defeated.

Sen. Max Baucus, D-MT, who introduced that amendment, introduced a second amendment with reduced spending, additional funding offsets, and a 2.2 percent update in physician payments through Nov. 30, 2010. The Senate approved the second Baucus amendment and has now sent the bill back to the House, which can’t act until at least Tuesday evening.

Should the House approve the Senate measure, CMS said in the announcement that they are "prepared to act expeditiously to make the appropriate changes to Medicare claims processing systems." The last time a negative update was allowed to go into effect and reversed, CMS issued retroactive payments.

Helpful links

AAFP News Now, June 18: CMS Forced to Begin Processing Medicare Payment Claims at Reduced Rate, AAFP President Calls Current Situation ‘Intolerable’

AAFP News Now, June 18: As Medicare Payment Reduction Takes Effect, Physicians Need to Look at Options; How to Cope With Lower Medicare Payments in Your Practice

AAFP Statement: Congressional Inaction Temporarily Reduces Medicare Compensation to 1994 Levels