Payroll Tax Cut Extension: Medicare Braces For 'Doc Fix' Lapse After Jan. 1 If Congress Doesn't Act
WASHINGTON — Nearly 650,000 doctors caring for millions of seniors will get a steep cut in Medicare payments Jan. 18 unless a gridlocked Congress issues a reprieve, program officials said Tuesday.
A provision waiving a scheduled 27.4 percent cut in physician reimbursement was included in the payroll tax legislation now ensnared in partisan political wrangling between the House and Senate.
Medicare deputy administrator Jonathan Blum told The Associated Press the cut will go through unless Congress acts, because the backlog from more than a couple of weeks of waiting for lawmakers could cause the program's computers to crash.
Tax legislation passed by the Senate last week included a two-month Medicare reprieve, but House Republicans rejected that Tuesday.
"Today's vote calls into question whether millions of seniors in Medicare will continue to get the care that they need," said Joyce Rogers, vice president of AARP, the lobby for older people. "More physicians may choose to no longer take Medicare patients due to this dramatic cut."
The recurring threat of cuts to doctors is perhaps the most visible symbol of Medicare's financial problems. Reductions are required by a 1990s budget law that failed to control spending but never got repealed. Instead, Congress passes a temporary fix each time, only to grow the size of cuts required next time around.
Medicare sent an alert to doctors on Monday telling them it will hold claims for the first 10 business days of 2012 unless Congress acts to waive the cuts.
On Tuesday, Blum said holding claims any longer than that could cause problems for Medicare's computers, designed to expedite payment. That disclosure may come as a shock to lawmakers, since Medicare was able to hold claims for more than 20 days during a similar standoff last year during the summer.
"We feel that (Medicare) came very close operationally to crashing our system back in 2010," Blum said in an interview. "From a stewardship perspective, that is something we feel we can never repeat again."
Blum said Medicare has told the contractors handling its billing to start paying claims for 2012 at the lower rate on Jan. 18.
One factor that worries officials is that claims volume is expected to be high in winter months.
After the previous prolonged standoff over cuts, Medicare also heard from many doctors who said delaying payments to wait for Congress doesn't necessarily help them. Most medical practices are small businesses with payroll and other obligations and limited ability to quickly raise cash.
"What doctors told us afterwards is that it was better to provide some cash flow than no cash flow," said Blum. Congress can restore the funds later.
If allowed to go through, such steep cuts could undermine care for millions of elderly and disabled Medicare beneficiaries, as well as military retirees. Payment rates in the Pentagon's program are pegged to Medicare.
And doctors are not the only medical providers affected. Therapists, nurse practitioners and other professionals are also covered by the same payment system. Some doctors have said they will stop taking new Medicare patients.
The American Medical Association was hoping for a permanent fix to the payment problem this year. That was thwarted by the failure of the congressional supercommittee to come up with a bipartisan plan to reduce government debt.
The payroll tax bill approved by the House included a two-year reprieve for doctors. But that was whittled down to two months in the compromise tax legislation overwhelmingly passed by the Senate passed last week, and intended as a place-holder to buy a little more time for lawmakers to negotiate. House Republicans rejected that deal.
The AMA says the annual spectacle is eroding the confidence of doctors and patients.
"Congress has again failed to fulfill its responsibilities," said Dr. Peter Carmel, the group's president. "It is shameful that patients and physicians are the collateral damage."
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RICARDO ALONSO-ZALDIVAR 12/20/11 04:40 PM ET Associated Press