Congress Approves Freeze on Reduced Medicare Doctor Payments

Medicare Supplement Insurance ImageCongress voted to approve a one-year freeze on Medicare physician payments to avoid a sharp rate reduction that was scheduled to go into effect on January 1, 2011. Before the vote, President Obama had called the freeze “an important step forward to stabilize Medicare.” He is expected to sign the legislation. The new one-year freeze follows a series of short-term fixes that have blocked the threatened cuts repeatedly over the past eight years.

The threatened pay cuts had raised the possibility that more doctors would turn away Medicare patients. Doctors had been facing a 25 percent cut in reimbursement rates for treating Medicare patients. The new “doc fix,” which is estimated to cost $19 billion, will be paid for through funding under the health care reform law.

The cuts are required because of legislation passed in 1997 that tied Medicare funding to a formula based on economic growth. Typically when the deadline for the cuts looms, Congress votes to block them. Then several months later the process repeats without lawmakers addressing the underlying problem of the formula. So far, the cuts have been blocked 10 times in the past eight years, including four times this year.

For the 46 million Americans in Medicare, the threatened pay cuts had raised the possibility that more doctors would turn away Medicare patients. “Stopping the steep 25 percent Medicare cut for one year was vital to preserve seniors’ access to physician care in 2011,” said Cecil B. Wilson, president of the American Medical Association. The first boomers turn 65 next year, “adding urgency to the need for a long-term solution before this demographic tsunami swamps the Medicare program,” he said.

The legislation also extends for one year a Medicare program that pays Part B premiums for low-income beneficiaries who can’t otherwise afford them. The program was due to expire Dec. 31, said Joe Baker, president of the Medicare Rights Center. “At a time when the financial security of an increasing number of Medicare consumers is uncertain, programs [like this] have become essential,” he said.

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