July 1 Medicare Fee Cut Update

Congress continues to trudge forward in the tar pits of Medicare reimbursement problems. Currently, there are two bills that specifically address the July 1 deadline where physicians could potentially be hit with a 10.6% cut in Medicare reimbursement. Sen. Baucus (D. Mont.), Senate Finance Committee Chair, has authored a bill which would do away with the impending cut, replacing it with slight increases to reimbursement; the money will come from heavy cuts to Medicare Advantage plans. The second bill, authored by Sen. Grassley (R. Iowa) seeks a slightly different road to the same goal; funding will come from budget shifts and a much smaller cut in Medicare Advantage funding. Both bills push for a .5% increase in reimbursement for the remainder of 2008, a 1.1% increase in reimbursement for 2009, a 2% bonus for physicians participating in e-prescribing, and another 2% bonus for physicians participating in Medicare's quality reporting initiative. The main difference is the funding model. Beacuse President Bush has vowed to veto any bill that drastically cuts into Medicare Advantage funding, Sen. Baucus' bill doesn't stand a chance if it makes it to the President's desk.

What will need to happen is for Sen. Baucus and Sen. Grassley to come together and agree upon a solution that will not be vetoed. Sen. Hutchison and Sen. Cornyn both support the physician reimbursement elements in both bills and agree that the Democrats will work quickly to propose a bill that President Bush will sign. Basically, there is no time to present a bill, have it vetoed, attempt to override, then put together a compromise and have it signed before July 1. We just need to skip to the compromised proposal.

Finally, if July 1 comes around faster than the compromised bill can be presented, Congress will likely enact an extension to push the cut back even further to give everyone time to perfect the new bill.