Medicare Physician Pay Cut Forestalled as Administration Freezes Payments; Take Action Now to Support a Payment Fix

June 30, 2008 – The U.S. Department of Health and Human Services (HHS) announced it will freeze the current Medicare physician payment system because the Congress left Washington for its July 4 recess without reaching agreement on legislation to avert the scheduled 10.6 percent pay cut. Congressional staff report the freeze could last up to 10 days past the statutory July 1 deadline, which means that the Senate will have three days after it reconvenes on July 7 to pass a payment fix before the HHS freeze is lifted.

Senate debate was particularly heated on Friday, June 27, as the clock ticked down to the July 1 Medicare deadline, but Senators could not reach agreement on how to pay for the fix. The previous night in a major departure from Senate decorum, senators yelled at one another during a vote, which left Democrats one vote short of the 60 needed to consider their version of the Medicare bill. The vote was held open for an additional 25 minutes so that Senators Barack Obama (D-IL) and Hillary Rodham Clinton (D-NY) could get to the chamber from their first joint fundraiser at a Washington hotel. Republicans grew increasingly upset about waiting and called for shutting down the vote. Democratic leadership countered with speeches predicting they would gain additional Senate seats next year because Republicans supported the Bush Administration's Medicare policies that made legislative compromise impossible.

As reported previously, the Democrats would like to restore physician payments for 18 months by cutting payments to Medicare Advantage plans, private fee-for-service insurers and HMOs. The White House, however, has threatened a veto over Medicare Advantage cuts, and negotiations between Senate Democrats and Republicans broke down when the Democrats decided to move forward with a House bill that would cut Medicare Advantage plans after that bill passed the House of Representatives with a veto-proof margin.

New talks between Senate Democrats and Republicans will need to resolve this issue before July 10. Until then, physician payments will stay as is.

Advocacy by all physicians continues to put pressure on the Senate to pass needed legislation to avert the payment cuts. Please visit the ASH Advocacy Center to send a letter to your senators today.