Congressional Spat Over Doctor's Medicare Pay Threatens Obama's Healthcare Reform Effort

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A Congressional stalemate over how to stave off a hefty pay cut to doctors treating Medicare patients threatens to undermine President Barack Obama's healthcare reform effort - even as the administration mails out a glossy brochure to reassure seniors the healthcare program is on solid ground.

For the third time this year, Democrats and Republicans are squabbling over a provision to approve billions of dollars in new spending to avoid a scheduled 21.3% cut in reimbursements to doctors who treat Medicare patients.

If GOP senators don't allow the stalled proposal to pass, some doctors will stop treating Medicare recipients, Obama said in his weekly radio and Internet address last Saturday.

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How lawmakers will resolve the problem is up in the air. Initially, Democrats had proposed a five-year fix, then three years. Now leaders are hoping to postpone the cut until the end of 2011.

If the problem isn't resolved, it could wreak havoc on Obama's healthcare reform plan, which proposes to use Medicare as a testing ground for improving the quality of care for all Americans. Concerns about Medicare's future stability could also present problems for Democrats in the elections, as seniors fret over what impact reform will have on their medical care.

"We will not have that cut," House Speaker Nancy Pelosi, D-CA, told the Associated Press.

The reimbursement problem has its roots in a 1990s deficit reduction law. Over the years, Congress has routinely waived the cuts. But that only complicated the long-term problem, increasing the size of future cuts needed to meet deficit reduction goals.

Repeated short-term fixes of the problem in recent years have left doctors frustrated and now some are refusing to take new Medicare patients. Since the latest extension expired May 31, doctors have been holding off on submitting claims until Congress approves another patch.

The latest fix is part of a multi-billion dollar bill that would extend several popular tax breaks while greatly increasing the tax that oil companies pay into an oil spill liability fund. Republican senators have refused to go along with higher taxes without offsetting expenditure reductions. Meanwhile, the doctors' pay issue languishes.

Roughly 97% of doctors nationwide are participating in Medicare, about the same as in 2009, according to the Centers for Medicare and Medicaid Services. But 17% of doctors say they are now restricting the number of Medicare patients they will accept, according to a survey conducted by the American Medical Association (AMA). The figure rises to 31% for primary care physicians, many of who blame the constant threat of payment cuts.

"This cut is basically the last straw," J. James Rohack, president of the AMA, which represents thousands of doctors told The Wall Street Journal. "This is no way to run a major health insurance program."

Although government surveys indicate that doctors are about equally compensated for Medicare compared to that of privately insured patients, some doctors say that's not always the case.

Dr. Lee Antles, an internist in Olympia, Washington, says Medicare pays him $95 for a visit that covers six organ systems. By comparison, Aetna Inc. (NYSE: AET) pays $129 and Uniform Medical Plan, which covers state workers, pays $140. To make up for the reduced reimbursements, his wife Margie has taken out four loans and borrowed money from her parents.

She told The Journal the financial pressures reached a breaking point after Memorial Day, when the Senate adjourned without passing another delay in the payment cuts. "We said, 'We have to sit down over the kitchen table and talk about this. We cannot ignore this anymore.'"

Some Medicare advocates blame Congress and the administration for not dealing with the problem when they conducted marathon sessions debating the healthcare overhaul. The healthcare legislation cut $500 billion from hospitals, insurers and other Medicare providers in order to provide coverage for the uninsured.

Eliminating the reimbursement cuts would have pushed the cost of the legislation above Obama's preset limit of $1 trillion, over 10-years.

"They should have used Medicare dollars to fix this," economist Marilyn Moon who helped oversee Medicare's finances from 1995-2000, told the AP. "It's irresponsible that the health care law left such a major issue unresolved while at the same time claiming to reduce the federal deficit."

The administration wants to repeal the cuts altogether, and the House recently passed a bill to do that. But the Senate couldn't muster the 60 votes needed to pass it.

"The key problem is that no one wants to pay for it," John Rother, top strategist for AARP, the seniors' lobby told the AP. "This is something that requires some additional revenue, and we should face up to that fact."

Meanwhile, the administration is mailing out a brochure to 46 million Medicare recipients extolling the benefits of the new health care law. The bill, says the brochure, "keeps Medicare strong and solvent."

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