Congress replaces 10.1% Medicare physician pay cut with 0.5% increase for six months

Both houses of Congress have voted to replace the scheduled 10.1-percent Medicare physician pay cut with a 0.5-percent increase set to expire June 31, 2008. The measure also extends the SCHIP program through March 31, 2009. All signs from the White House indicate the president will approve the legislation.

State and national physician organizations are voicing disappointment over the legislation, stating that a 0.5-percent-increase doesn’t cover the cost of medical inflation. AAFP President Jim King, M.D., said in a Dec. 19 statement, “Now, America’s family physicians will have to decide whether to continue seeing their current Medicare patients or whether to accept new Medicare patients, knowing their payment could be slashed by even more than 10 percent, come July. And yet they must decide whether to participate in Medicare before Jan. 1.”

"Financially, family physician practices are bleeding to death,” King said in a Dec. 19 AAFP News Now article, adding that this congressional measure only delays “what needs to happen, which is a complete re-evaluation of the payment system and an elimination of the SGR in order to bring some sanity to our present payment formula.”

By postponing the cuts until July 1, 2008, lawmakers set up a possible showdown on Medicare reform for the spring with a deadline that falls in the heart of the presidential campaign season. “It’s a game of chicken and Congress has put physicians and their patients squarely in the middle for election-time politics, while failing to address the underlying problems of Medicare financing,” said TAFP’s chief executive, Tom Banning.

The measure is expected to cost about $6 billion over the next five years. Congress would partially offset the cost by cutting $1.5 billion in payments to a stabilization fund for Medicare Advantage plans, designed to encourage private carriers to expand Medicare PPO products in underserved areas.

Physicians face a Dec. 31 deadline to change their Medicare participation status, although they can choose to stop taking Medicare patients at any time. For information on the three options available for Medicare participation, check out the Medicare options page on the AAFP Web site.

Read the statement by AAFP President Jim King, M.D.

Watch TAFP’s new video Webcast, “Academy in Action: A Crisis in Medicare.”