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Lame-Duck Congress Faces Medicare Glitch

Errors in the government's formula for calculating Medicare physicians payments could result in another fee decline by January 2003.
Errors in the government's formula for calculating Medicare physicians payments could result in another fee decline by January 2003.

Congress returns Tuesday for a lame-duck session with several must-pass items on the agenda, ranging from spending bills to the new Department of Homeland Security. Also on the list is fixing a glitch in Medicare that's cutting fees to doctors. For Morning Edition, NPR's Julie Rovner reports.

On Jan. 1 2002, fees for physicians under the Medicare program dropped by an average 5.4 percent. Yet the cut was unintended -- according to those involved it was due to errors in the government's formula for calculating payments. But unless Congress acts in the coming weeks, doctors will see fees decline by another 4.4 percent next January 1.

If that's allowed to happen, the results could be catastrophic, says American Medical Association President-Elect Donald Palmisano.

"We are approaching a meltdown," says Palmisano. "The foundation of Medicare is crumbling. We believe over 20 percent of physicians have stopped taking new Medicare patients and we think it will go over 40 percent if we don't get the errors that were made in the present formula corrected."

The AMA has an obvious financial stake in painting a bleak picture of what might happen if physician fees are cut again, says Rovner. But the head of the Medicare program, Tom Scully, says he's worried, too. Scully says that so far, reports of Medicare patients having difficulty finding care have been mostly anecdotal. But that could soon change.

The exact number of doctors who have stopped taking new Medicare patients remains unclear. Other physicians who don't want to stop taking Medicare patients are opting to charge them more, instead. They're also requiring patients to pay them the full amount, and then file with Medicare for reimbursement.

"That's probably going to be a growing trend," says Scully. "And I don't think that's a particularly good trend for seniors or for the program."

Part of the reason the Medicare payment formula hasn't been fixed is a battle between Congress and the Bush administration over who should pay for it. Scully says the real problem is that Congress can't say yes to doctors and no to every other health provider group with its hand out.

"Nursing homes want more money, hospitals want more money, home health agencies want more money -- all across the board." And if Congress tries to pass a bill to fix the physicians' payment glitch, says Scully, it will have to add on another $40 billion to appease the other groups. "That's why this hasn't happened," he says.

But the AMA's Palmisano says that's no excuse for Congress to do nothing.

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