Physicians Face 10.6 Percent Medicare Payment Reduction on July 1

Congress failed to pass a measure to block a steep reduction in the Medicare physician payment rate before adjourning for a weeklong July 4 recess. That failure allows a 10.6 percent cut to take effect on July 1 that could end up limiting or denying care to millions of Medicare beneficiaries.

'The impact of this failure goes beyond the medical community; it threatens Medicare beneficiaries' access to health care because it further drives family physicians toward financial insolvency," said AAFP President Jim King, M.D., of Selmer, Tenn. in a prepared statement.

To illustrate the emergence of those patient access problems, King cited a March 2008 report from the Medical Group Management Association stating that nearly 24 percent of physicians in all specialties had begun limiting or not accepting new Medicare patients. That same report noted that 46 percent of physicians said they would limit or stop accepting new Medicare patients if the 10.6 percent pay cut scheduled for July 1 went into effect.

"Family physicians have worked tirelessly on behalf of Medicare patients," King said. "Despite those efforts, family physicians have struggled with 20 percent inflation in costs for office space, equipment, supplies, health and administrative staff, medical liability insurance and other costs of business since 2001.

"During that time, their Medicare compensation for their services has stagnated. No small business -- as most family physician practices are -- can sustain that kind of loss and remain open to care for people."

Earlier this week, the House overwhelmingly passed an 18-month physician Medicare payment bill that would have prevented the 10.6 percent pay reduction scheduled for the remainder of this year, along with a 5 percent cut scheduled for 2009 under the sustainable growth rate, or SGR, formula.

But Senate supporters of that bill, H.R. 6331, (at the THOMAS Web site, type, "H.R. 6331," in the search box after selecting "Bill Number") could not muster enough votes to bring the measure to the Senate floor for a vote, and the bill was shelved, allowing the 10.6 percent cut to go into effect.

Both the Senate and House have adjourned for the July 4 recess and will not reconvene until July 7, well after the cut takes effect.

"It is unconscionable that our elected officials -- who were sent to Washington to represent the needs of the American public -- cannot act to ensure access to care for millions of their elderly and disabled constituents," King said in his statement.

He stressed that the Senate "must get back to work and find a solution that will allow family physicians to serve their Medicare patients.

"Of all their constituents, elderly and disabled Americans are least able to cope with the instability congressional inaction forces on their access to health care," King said.

The AAFP is now focusing on making sure Congress passes retroactive legislation that would negate the 10.6 percent cut. The Academy will continue to push for a long-term measure that blocks impending cuts and that gives Congress enough time to replace the flawed SGR formula, which has triggered reductions in the Medicare physician payment during the past several years that have been averted only by last-minute congressional action.