Congress OKs temporary reprieve on Medicare pay cut

January 10, 2008

In the closing days of the 2007 session, Congress prevented a Medicare payment cut and kept the State Children’s Health Insurance Program (SCHIP) alive, but both moves are only temporary. By unanimous consent on Dec. 18, 2007, the Senate passed the Medicare, Medicaid and SCHIP Extension Act of 2007. The House passed the same legislation 411-3 the next day, and President Bush signed the measure into law on Dec. 29.

In the closing days of the 2007 session, Congress prevented a Medicare payment cut and kept the State Children’s Health Insurance Program (SCHIP) alive, but both moves are only temporary. By unanimous consent on Dec. 18, 2007, the Senate passed the Medicare, Medicaid and SCHIP Extension Act of 2007. The House passed the same legislation 411-3 the next day, and President Bush signed the measure into law on Dec. 29.

Instead of facing a 10.1% across-the-board cut in Medicare reimbursement beginning Jan. 1, physicians were given a 0.5% increase. But the boost expires June 30, meaning that the reduction will go into effect in July unless lawmakers approve another bill that would continue to stave it off. Without such a move, the Medicare payment formula would act as if the boost had never happened, and rates as of July 1 would be 10.1% lower than in 2007. The bill also extends payment provisions for rural physicians.

In light of the action, the Centers for Medicare & Medicaid Services extended the deadline for changing Medicare participation status to Feb. 15.

While physician organizations said the half-percent increase is better than a double-digit percentage cut, they are still disappointed that Congress was unable to enact a longer-term Medicare solution. The American Medical Association and other groups were pushing for 2 years of increases that would reflect the rise in the annual cost of providing medical care.

The 6-month postponement of the cut means physician organizations need to keep pressuring lawmakers to act as soon as the new session starts, said James King, MD, president of the American Academy of Family Physicians.
The legislation also would maintain the current enrollment in SCHIP (approximately six million) by adding $800 million to the existing annual SCHIP funding of $5 billion, according to the AMA. The Congressional Budget Office said that, without that extra funding, at least 19 states would have faced program shortfalls in 2008.