Senate bill delays Medicare physician payment cut by 1 month

The Senate recently passed a bipartisan bill that would prevent a 23% cut in Medicare physician payment that is scheduled to go into effect Dec. 1. However, if the House approves the bill, physicians still face the prospect of a 25% cut on Jan. 1, 2011, according to a press release from the American Medical Association.

The Physician Payment and Therapy Relief Act of 2010 was introduced by Senate Finance Committee Chair Max Baucus (D, Mont.) and ranking member Charles Grassley (R, Iowa). They have also agreed to work together to pursue a 12-month patch before the month-long postponement in the pay cut expires.

The House is not expected to take up the Senate bill until after Thanksgiving. House leaders introduced their own legislation on Nov. 18 that would extend physician Medicare payments by 13 months and provide a 1% update through the end of 2011. Congress returns from the holiday break on Nov. 29, at which time the House is expected to vote.

Short-term reprieve

The AMA applauded the Senate for moving quickly on a bill once Congress returned from the elections on Nov. 15, but it emphasized that the House must act on its legislation to avert the cuts, according to an AMA press release.

“ …This is a short-term reprieve, and the AMA is urging Congress to pass a one-year fix as soon as they return from the Thanksgiving holiday,” AMA President Cecil Wilson, MD, stated in the press release. “Delaying the 25% cut to the end of 2011 will inject some stability into the Medicare program for patients and physicians and provide lawmakers with time to develop a long-term solution to the broken physician payment system.”

The 1-month extension in the Senate bill would be paid for using the Medicare savings from a new Centers for Medicare & Medicaid Services policy that reduces payments for multiple therapy services provided to patients in a single day.

In related health care policy news, the Department of Health and Human Services (HHS) today passed new regulations that require health insurers to spend 80% to 85% of consumers’ premiums on direct care for patients and efforts to improve care quality.

This regulation, known as the “medical loss ratio” provision of the Affordable Care Act, will make the insurance marketplace more transparent and make it easier for consumers to purchase plans that provide better value for their money, according to a news release from HHS.

“Thanks to the Affordable Care Act, millions of Americans will get better value for their health insurance premium dollar,” HHS Secretary Kathleen Sebelius stated in a press release. “These new rules are an important step to hold insurance companies accountable and increase value for consumers.”

The Affordable Care Act

The Affordable Care Act enables consumers to receive more value for their premium dollar because insurance companies will be required to spend as much as 85% of premium dollars on medical care and health care quality improvement, instead of administrative costs, starting in 2011. If insurance companies fail to comply, they will be required to provide a rebate to their customers beginning in 2012.

The new rules will protect up to 74.8 million insured Americans and estimates indicate that up to 9 million Americans could be eligible for rebates starting in 2012 worth up to $1.4 billion. Average rebates per person could total $164 in the individual market.

The medical loss ratio regulation outlines disclosure and reporting requirements, how insurance companies will calculate their medical loss ratio and provide rebates, and how adjustments could be made to the medical loss ratio standard to guard against market destabilization.

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