Can Congress Put An End To Annual Medicare Payment Ritual?

March 14, 2014

Congress is still searching for money to avoid a 24 percent cut in pay for doctors who treat Medicare patients that kicks in April 1.

Seniors’ premiums cover 25 percent of their Medicare Part B outpatient services, including doctor visits, outpatient lab tests and hospital visits, medical equipment and home health care.

The government picks up the rest of the bill. Federal law requires Medicare number-crunchers to decide on premiums by Oct. 1 for the following year.

On Friday, House Republicans succeeded in passing legislation that would change the formula that Medicare uses to calculate pay for doctors.

The fix would eliminate the perennial problem once and for all. But the legislation would pay for it by delaying penalties for five years for people eligible for subsidies who don’t buy insurance required by the Affordable Care Act. The reduction in subsidized insurance would save money.

The Senate is unlikely to pass the bill, and President Obama has said he would veto it, in any event.

To calculate seniors’ premiums, Medicare officials assumed that Congress would do what it has done since 2002: block the cut.

This year’s premium of $104.90 a month includes the seniors’ share of physicians’ fees without a pay cut. (Some wealthier seniors pay an additional surcharge, and low-income beneficiaries may pay less if they qualify for subsidies.)

“It’s reasonable to allow for the likelihood of reaching a doc fix,” said AARP spokesman Jim Dau. “And we have heard from our members for years that they are willing to pay their fair share because Medicare is a lifeline for them and a tremendous source of comfort and security.

“What isn’t fair, given that we have been dealing with this for more than a decade, is the constant uncertainty and wrangling,” Dau said, over whether to repeal the physician payment formula.

Instead of replacing the formula as enacted, Congress is likely to delay the cut until the end of the year, when they will face the same dilemma again.

In addition to the anxiety this annual ritual provokes in many patients and their doctors, a premium subsidy for some low-income Medicare beneficiaries is also in jeopardy. The “qualified individual,” or QI subsidy, covers the monthly premium and some other costs for more than 500,000 people in Medicare. Because it is not a permanent subsidy, Congress has to decide every year whether to extend it.

Leslie Fried, senior director for the National Council on Aging, is confident that Congress will act to avoid a doctors’ pay cut, but she’s still worried about funding for the QI subsidy, now and in the future.

“There will be something, even if it’s a nine-month patch, but what’s important is that there is no harm done to low-income beneficiaries,” she said.

In late February, AARP, NCOA, AFL-CIO and 20 other organizations urged congressional leaders to make the QI subsidy permanent and repeal the “sustainable growth rate” formula that Medicare uses to calculate how much to pay physicians that produced the pay cut.

“Failure to do this would seriously threaten vulnerable Medicare beneficiaries’ basic economic security and access to physicians,” they said.

Copyright 2014 NPR. To see more, visit

You Care.

You are one of the CPR readers who wants to know what is really going on these days. We can help you keep up - The Lookout is a free, daily email newsletter with news and happenings from all over Colorado. Sign up here and we will see you in the morning!