Payment Delays Resulting From Debt Ceiling Impasse Are Possible, AAFP Warns

July 27, 2011 05:15 pm News Staff

The AAFP is alerting members that they could face a delay in receiving Medicare payments if Congress and the White House are unable to reach an agreement on raising the debt ceiling by Aug. 2 and the federal government defaults on its loans.

Both chambers of Congress and the White House have been in negotiations to raise the debt ceiling for weeks, but they have been unable to reach an agreement thus far, creating the possibility that the debt ceiling will not be raised by the rapidly approaching deadline and the government will default on its financial obligations. If this happens, the federal government will have only enough money to pay 40 percent to 50 percent of its bills, resulting in a likely delay in Medicare payments to physicians, said Kevin Burke, director of the AAFP Division of Government Relations.

"I would presume that Medicare payments are very low on the list of priorities that would have to be met with the much-diminished cash on hand," said Burke in an interview with AAFP News Now. In this type of scenario, the federal government is likely to withhold Medicare payments to physicians until the debt ceiling issue has been resolved, he added.

The AAFP recently sent a strongly worded letter to congressional leaders and the Obama administration, urging them to agree on a debt-reduction proposal that reforms the Medicare physician payment system and addresses the nation's family physician and primary care workforce needs.

In addition, the AAFP joined a number of other physician groups in commending a budget-deficit reduction plan put forth by a bipartisan group of senators that proposes eliminating the current Medicare payment formula. However, no agreement has been reached on this plan or any of numerous other plans on the table.

"This is all new territory," said Burke. "The government has never ventured into default before, and it is hard to know exactly what will happen."

In the meantime, Burke urges AAFP members to contact their members of Congress to tell them to "resolve this issue immediately."