Medicare Improvements for Patients and Providers Act of 2008 Becomes Law

On July 9 the U.S. Senate, after weeks of debate and impasse, passed the “Medicare Improvement for Patients and Providers Act of 2008” (S. 3101) that postpones for 18 months the scheduled 10.6% pay cut to physicians providing Medicare services under the sustainable growth rate (SGR) formula. The legislation, which was passed by a 69-30 vote, also eliminates an additional 5% pay cut for physicians that had been scheduled to go into effect in January 2009. Rather the legislation called for a 0.5% payment increase this year for physicians that treat Medicare patients, and a 1.1% increase for Medicare program physicians for 2009.

The House had already passed a similar Medicare bill (H.R. 6331).

On July 15 President Bush vetoed the Medicare Improvement for Patients and Providers Act of 2008 that was passed by both the Senate and the House of Representatives. Bush said he supported the primary objective of the legislation to forestall reductions in physician payments, but called the bill “fiscally irresponsible” and that it would undermine the Medicare prescription drug program.

However, on the next day (7/16), first the House and then the Senate voted to override the veto and block the president's action. The House voted 383 to 42, and the Senate voted 70 to 26 to override Bush's veto. Republican members broke heavily from the White House position on this vote.

Background of New Medicare Legislation

Thus, the “Medicare Improvements for Patients and Providers Act of 2008” was enacted, making several changes to the Medicare program. Information about some of the changes is outlined below. Detailed instructions about these changes have been communicated via listserv to CMS providers and other affected parties. CMS will be implementing other provisions of the legislation in the coming months and will announce additional information as it becomes available.

Physician Pay

As a result of the new law, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate reduction of -10.6 percent is retroactively replaced with the fee schedule rates in effect from January - June, 2008, which reflected a 0.5 percent update from 2007 rates.

Effective immediately, CMS has instructed its contractors to implement the new law. However, it may take up to 10 business days to implement these changes. To minimize physician disruption during this transition, CMS will post the new physician fee schedule as soon as possible and will continue its rolling 10 day hold and release of claims. This means that, until the new fee schedule rates are implemented, some claims may still be paid at the lower rates that were in effect between July 1st and July 15th. To the extent possible, contractors will begin to automatically reprocess any claims paid at the lower rates in a timely manner. CMS will issue guidance about the collection of corrected co-insurance payments in the next few days.

More information on physician pay issues is available at http://www.cms.hhs.gov/PhysicianFeeSched/

Details on both bills (S. 3101 and H.R. 6331) can be obtained from the Thomas website of the Library of Congress at http://thomas.loc.gov/ by entering the bill number in the appropriate search box.