Deficit Reduction Act Mandates That Medicare Payments Stop Sept. 22-30

Don't expect Medicare payments to arrive at your bank or in your mailbox between Sept. 22 and Sept. 30. That's when CMS will be complying with the Deficit Reduction Act of 2005 and placing a hold on all Medicare claims during the last nine days of the federal fiscal year.

"In essence, no payments on claims will be made" until Monday, Oct. 2, says an MLN Matters article (PDF file: 2 pages / 31 KB. More about PDFs.) on the hold. "No interest will be accrued or paid, and no late penalty will be paid to an entity or individual for any delay in a payment by reason of this one-time hold on payments," says the article.

The "Medicare holiday" means FPs must plan ahead to ensure adequate cash flow during the hold on funds, according to Pat Smith, senior vice president for government affairs at the Medical Group Management Association.

"You're not going to have payments from the government showing up for that nine-day period," Smith said. "The key thing in terms of impact is that physician offices must be aware far enough in advance to be able to manage it."

He advised FPs to review the percentage of Medicare patients in their census, track the number of Medicare beneficiaries they see in the period before the hold on funds and, "to the greatest extent possible, get a ballpark estimate of what the Medicare payment for those patients would be." Then plan ways to meet payroll and other office expenses, says Smith.

Depending on the percentage of Medicare patients in a practice, the impact of the nine-day hold could be minimal or very challenging.

"If it's 90 percent, they're going to have lot more managing to do than if it's 20 percent," said Smith. "Hopefully, their payroll account doesn't go down to zero at end of the month or middle of month. Those practices operating on a tight cash flow may have to go talk to lenders or the bank" for short-term loans until the Medicare payments kick in again when the federal government's 2007fiscal year begins.

Congress included the one-time, nine-day hold to defer an estimated $5.2 billion in Medicare spending from fiscal year 2006 to fiscal year 2007, which begins on Oct. 1.

"This is something the Congress has done before, but it hasn't been done before to physicians," said Smith. "It's done this for years in terms of pushing off payments to civilian federal employees for different agencies. It's not an unusual accounting maneuver. It's a shell game -- really a Ponzi scheme, to a degree -- to keep pushing off payment to next year so when they do the books for the current fiscal year, those payments won't appear, though the liability is still there."