CMS Begins Processing Claims at Lower Rate as Bush Vetoes Medicare Payment Bill

President Bush's veto of legislation that blocks a 10.6 percent reduction in Medicare payments to physicians could result in a paperwork tangle for family physicians who submitted Medicare payment claims on or after July 1, especially because CMS has pledged to reprocess the claims if the veto is overridden.

The House and Senate both passed H.R. 6331 (at the THOMAS Web site, type "H.R. 6331" in the search box after selecting "Bill Number") by veto-proof margins in the past month. However, Bush's July 15 veto of the legislation led to another showdown in Congress, as legislators worked to ensure they had the votes to override the veto.

Although CMS delayed processing Medicare claims as of July 1 to give Congress more time to pass a Medicare payment bill negating the 10.6 percent cut, under current law, the agency had to start processing claims by July 15, said CMS spokesperson Peter Ashkenaz. On July 15, CMS began processing claims submitted on July 1, and the agency will start processing claims submitted on July 2 and July 3 on July 16 and July 17, respectively, applying the 10.6 percent reduction to the payments. The agency will continue to process claims in this way until Congress overrides the president's veto, if that occurs.

If the veto is overridden, as expected, the cut will be rescinded retroactively, and the claims will be reprocessed at a higher rate later this month, said Ashkenaz.

In the meantime, physician practices may only collect copayments and deductibles from Medicare beneficiaries based on the reduced Medicare rate, even if they are charging the pre-July 1 rate to Medicare, as CMS previously recommended. Physician practices that want to avoid confusion over payment rates may choose to hold their Medicare billing in-house until new legislation is enacted or until cash flow becomes a problem.

Most congressional Republicans and Democrats support legislation to block deep reductions in the Medicare physician payment rate, but they differ on how to pay for the measure. H.R. 6331 would provide an 18-month payment update that maintains current funding levels for the rest of this year and enacts a 1.1 percent increase in 2009, essentially blocking the current 10.6 percent cut that took effect on July 1 and a 5.4 percent reduction scheduled for 2009.