A Nick in Medicare's Budget Cut

Doctors who treat Medicare patients will get a 10% cut in their payments on July 1 and a 21% cut by 2010 unless Congress finds a way to make up for a budgetary shortfall.

The House is attempting to block the cut; instead, they’re auguring to hit US private health insurers’ Medicare Advantage programs that minister to the elderly and/or disabled because, according to a congressional advisory commission, they get, on average, 13% more than it costs Medicare to offer services itself. The measure would also “phase out payments made to insurers to reflect the higher cost of having their patients treated at teaching hospitals,” however, “payments made directly to such hospitals for the same purpose wouldn't be affected.”

The Democratic-backed measure passed 355-59, clearly the necessary two-thirds margin that would override a threatened veto by George W. The Senate, however, has yet to act on the issue.

At 3:50 PM, June 24, 2008, a reader said, in response to this, “Now, we're getting somewhere!” But, don’t be fooled---

Below, some more reader responses:

From: Fredrick H. (MD, PhD, JD)

Sent: Tue 6/24/2008 8:49 PM

Wow! And by a veto-proof majority! I guess the rethugnicans are beginning to see the election coming up, and realizing they've gotta do Something to give themselves some street cred.

Let's hope the Senate can do the same thing.

From: Gilbert R (An academic medical groups’ CEO)

Sent: Date: Jun 25, 2008 9:13 AM

We are not getting anywhere. This is just another band-aid. Historically, “solutions” resulting from this annual dance of politics is/has been/will be flawed. Moreover, the lack of congressional will to address the crux of the matter—the cost-effectiveness, if not actual benefit from the health care ‘investment,’ is palpable. And, even if the doctors’ fee cut is eliminated, past reductions coupled with nominal increases (like the 1.1% proposed for 2009) is clearly inadequate; it puts the overall Medicare payment “improvement” at about 35% over the last 8 years, at the same time that the cost of running a practice is up 51%.

Cutting the money from the Medicare Advantage plans is a nick, vs. the estimated 14% additional funding that they have been getting, that is, above what Medicare would have paid for the same care. By the way, the payers aren't paying Medicare rates, they are paying 75%-83% of Medicare in the norm to the physicians - great margins in any business.