Congress fails to prevent April 1 cut in Medicare physician payments; CMS instructs contractors to hold claims

Update on the Sustainable Growth Rate formula (SGR) freeze:

Last evening, the Senate adjourned for a two-week spring recess without voting on a bill that would have extended the current Medicare payment freeze beyond March 31, 2010. The House of Representatives has already passed this bill which addresses several other provisions including an extension of COBRA benefits to those who have lost jobs. The Senate plans to resume consideration of the bill when it reconvenes on April 12 and could vote on it on that same date.

Our current situation, in which a 21.3 percent cut to the Medicare conversion factor mandated by the SGR formula has been replaced with a freeze (a zero percent update), expires on March 31, 2010.

When faced with similar circumstances in the past, the Centers for Medicare and Medicaid Services (CMS) has placed a 10-day hold on claims processing to allow Congress more time to address the issue and prevent CMS from having to process and pay claims at a reduced rate and they will do so again per the following CMS notice:

Information Regarding the Holding of April Claims for Services Paid Under the 2010 Medicare Physician Fee Schedule (3-26-2010)

The Centers for Medicare & Medicaid Services (CMS) is working with Congress, health care providers, and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims for physicians, non-physician practitioners, and other providers of services paid under the Medicare Physician Fee Schedule (MPFS). As you are aware, the Temporary Extension Act of 2010, enacted on March 2, 2010, extended the zero percent (0%) update to the 2010 MPFS through March 31, 2010.

CMS believes Congress is working to avert the negative update that will take effect April 1. Consequently, CMS has instructed its contractors to hold claims containing services paid under the MPFS (including anesthesia services) for the first 10 business days of April. This hold will only affect claims with dates of service April 1, 2010, and forward. In addition, the hold should have minimum impact on provider cash flow because, under the current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt.

Be on the alert for more information about the 2010 Medicare Physician Fee Schedule Update.