Congress Fails to Avert Medicare Payment Cut Scheduled for June 1

Congress has failed to pass a bill to provide a positive update in the Medicare physician payment rate for the next 19 months, thus allowing a 21.3 percent Medicare payment reduction that is based on the sustainable growth rate, or SGR, formula to take effect on June 1.

Although the House passed H.R. 4213 (at the THOMAS website, type "H.R. 4213" in the search box after selecting "Bill Number") on May 28, the Senate was unable to act on the legislation before adjourning for a week-long Memorial Day recess.

H.R. 4213 provides a 2.2 percent increase in the Medicare payment rate for the rest of 2010 and a 1 percent increase in the payment rate in 2011. The Senate is expected to act on the legislation quickly when it reconvenes on June 7, but the impending payment cut will technically take effect on June 1.

In the interim, CMS has instructed its contractors to hold Medicare claims for the first 10 business days of June to give Congress more time to pass a payment patch and to avert a "disruption in the delivery of health care services to beneficiaries and payment of claims for physicians," according to a May 28 memo from CMS. The payment hold will apply to claims with dates of service of June 1 and later.

"This hold should have minimum impact on provider cash flow because, under current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt," said the memo.

CMS took similar action in March when Congress failed to block a payment cut that took effect April 1 under the SGR. In that instance, CMS held payment of claims from April 1-15 to give Congress more time to pass a payment patch, thus negating the actual impact of the cut on physicians.