Why Doctors May Take an Accidental Pay Cut

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If Senate does not pass the pending Medicare Bill, many doctors who take Medicare will suffer a pay cut of more than 10 percent starting July 1. No one intended for the cut to happen, health policy correspondent Julie Rovner says.


There are politics aside from the presidential race. On Capitol Hill lawmakers are scrambling to finish a major Medicare bill this week. At stake is a cut to the doctors' pay, but it is a bit more tricky than that. Here to explain is NPR's health policy correspondent, Julie Rovner. Hi, Julie.


COHEN: So tell us a bit about this Medicare bill.

ROVNER: Congress is really coming down to the wire here. Unfortunately they have a habit of acting like a bunch of college students. They always leave things to the last minute. In this case they've really had six months to figure out how to avert this 10 and a half percent cut to doctor pay that will otherwise take effect next Tuesday, July 1st. It's a cut that nobody really intended to happen. It is kind of a glitch in the funding formula. The House passed the bill on Tuesday by an overwhelming 355 to 59 vote, but now the bill is kind of stalled in the Senate.

Senate Republicans there aren't sure they want to go along with the way the House has done the bill. They would pay for it by taking money away from private insurance plans that serves Medicare beneficiaries. That's something that the Bush administration and a lot of Republicans really support very strongly. They'd like to find a different way to pay for it, but again, time is running out.

COHEN: This bill also involves durable medical equipment, things like wheelchairs, oxygen tanks, explain what's going on with that part of it.

ROVNER: Well, this was something that was really just added on at the last minute, you never really have a Medicare bill that only involves one or two things. It has - they have a way of sort of growing and becoming really, what I call the lobbying Lollapalooza. This is always - Medicare bills have a way of attracting health-care lobbyists. In the case of durable medical equipment, studies have found that Medicare has been overpaying for this equipment for years. So, several years ago Congress decided that perhaps they should have competitive bidding for companies that want to sell their equipment to Medicare patients.

The problem is there are winners and losers. There are companies who've been overpaid, now say they're going to be underpaid or they're going to be cut out of the process altogether.

The companies who have been winners, who have won in this bidding process, want it to go ahead. So you've got very - groups of very strange political bedfellows. So you've got among the group that want competitive bidding to be delayed, you've got Senator Schumer and Senator Clinton from New York and Senator Hatch from Utah. Liberals and conservatives would like to have it delayed among those who'd like it to go forward. You've got some strange bedfellows like Senator Coburn from Oklahoma, one of the most conservative members of the Senate, and Senator Kerry, the Democratic nominee from 2004. So this is really not political as much as it is parochial. It's been a fascinating fight to watch.

COHEN: So what's the status of the bill right now?

ROVNER: Well, the competitive bidding demonstration would be delayed in the bill that passed the House on Tuesday, and it's in the bill before the Senate right now. And the bill came up in the Senate this morning, but Republicans objected and we could in fact - the Senate could be in this weekend, perhaps even getting to this bill.

COHEN: Julie, what happens if this bill doesn't pass?

ROVNER: The doctor pay-cut could take effect. There has been a pay-cut that has taken effect once before in 2002, it was a five percent cut, and doctors mostly just stuck with the program and did take care of patients, but really since then doctors' pay has been largely frozen or they've got perhaps one percent increases. And there's a real worry this time that doctors will certainly probably stop taking new Medicare patients and some doctors might even drop existing patients. So this is a big cut and a real concern, and really no-one wants this cut to happen. It's just a matter of finding a way to get this to go away and figure out how to pay for it in a way that Democrats and Republicans and President Bush all agree to. And time really is running out.

COHEN: NPR's health policy correspondent, Julie Rovner. Thank you.

ROVNER: You're welcome.

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