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Impacts of the Debt Ceiling Agreement on Medicare Providers

August 4, 2011 | No Comments
Posted by Sharlene Hunt

While some of the politicians involved in the federal debt ceiling discussions have vowed to protect Medicare beneficiaries from any adverse impact, Medicare providers have been targeted for cuts, which may in the end adversely impact the ability of Medicare beneficiaries to receive treatment.  As part of the debt ceiling agreement struck earlier this week, if Congress cannot come to an agreement on budget cuts by the end of this year, there will be an automatic 2% across the board reduction in Medicare payments to providers beginning in 2013.  Many providers have already proclaimed that they cannot afford another 2% cut across the board, and will consider withdrawing from the Medicare program as a result.  In addition, some politicians have indicated that further cuts to Medicare providers are on the table as part of the negotiations to cut the federal budget deficit by the end of the year.

Also of critical importance, but glaringly absent from the debt ceiling discussions, is the fate of the planned 29.5% reduction in Medicare physician payments, which is currently scheduled to go into effect January 1, 2012, unless this issue is once again kicked down the road.  We have commented on this issue in several prior blog posts.  Physician payments paid under Part B of the Medicare program are funded in part from general revenues, not exclusively from the Medicare Trust Fund.  If the imposition of this reduction is not addressed legislatively, there will be a tremendous impact upon physicians.  This could result in the exodus of a large number of physicians from the Medicare program.

In the context of the debt ceiling discussions, the 29.5% reduction in Medicare physician payments is already built into the budget.  If this reduction is reversed or postponed legislatively, an unbudgeted increase in general fund expenditures not contemplated under the current debt ceiling agreement will occur.

We will have to see how all of these issues play out.  However, providers participating in Medicare should consider the impacts of these types of Medicare reductions, and how that will impact on their continued Medicare participation.  In this context, it is interesting to note that the Centers for Medicare and Medicaid Services has recently revised Form CMS-855I, the Medicare Enrollment Application for Physicians and Non-Physician Practitioners.  This application is used for any practitioner newly enrolling in Medicare, as well as practitioners who need to report changes in their enrollment information (such as adding or changing a practice location).  The revised application contains a new question asking whether the practitioner accepts new Medicare patients.  Physicians should also keep in mind the Board of Medical Examiners rule that requires notice to patients prior to terminating a physician-patient relationship.

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