On March 1, 2010, the 21 percent overall cut in Medicare reimbursements to physicians became effective.  However, it could still be averted by a month-long stay that the U.S. House passed on February 25, 2010; action is pending in the Senate.

In the meantime, more physician practices are considering not accepting new Medicare patients. Many other physicians are seeking employment at hospitals.  Others are focusing more on patients who pay out of pocket and ending relationships with insurers that cut rates.

If the Senate passes the temporary fix that is expected to put the 21 percent cut on hold, it would be the latest in a series of patches that have become a nearly annual custom in Congress since 2003.

Under the formula by which doctors are paid by Medicare, growth in total payments to physicians cannot exceed annual growth in the nation’s gross domestic product.  As the United States population ages, doctors are serving more patients and using more costly treatments and tests accompanied by advances in technology.  As a result, physicians are requesting reimbursements that exceed GDP growth, which has averaged about 3 percent. Medicare is required to ensure that total payments do not exceed budget.

Lobbyists for physicians, including the American Medical Association, have played the primary role in persuading Congress to keep the rate cuts from going into effect.

© 2010 Parsonage Vandenack Williams LLC

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