- Associated Press - Thursday, November 18, 2010

WASHINGTON (AP) - The Senate late Thursday voted to postpone a massive cut in Medicare pay for doctors, agreeing to pay doctors at current levels through Dec. 31.

If the House goes along, Congress would stave off a 23 percent cut in doctors’ pay scheduled to take effect Dec. 1. The cost of the one-month postponement, $1 billion over 10 years, will be paid for by changes in Medicare reimbursement for outpatient therapy services.

The Senate’s voice-vote approval came after an agreement on the one-month postponement was announced earlier in the day by Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel’s top Republican, Charles Grassley of Iowa. Baucus and Grassley also pledged to work toward a mutually acceptable 12-month postponement that could pass before the end of this year.

Doctors were threatening to stop taking new Medicare patients if the cut went through, and experts warned that the situation would undermine the health care program for 46 million elderly and disabled. Health care for military service members, families and retirees also would be jeopardized because Tricare payments are tied to Medicare‘s.

AARP Senior Vice President David Sloane hailed the Senate vote and urged to House to follow suit to avoid what he called “a potentially devastating pay cut to doctors in Medicare, ensuring seniors can continue to see their doctors during the holiday season.”

“Tonight’s vote will help to extend the immediate deadline and give lawmakers time to adopt the yearlong extension that seniors and doctors need,” Sloane added.

The steep cuts are the consequence of a 1990s budget-balancing law that has failed to control Medicare costs.

At the time, lawmakers devised a formula for automatic cuts as a braking system to keep Medicare spending in line. Except when costs went up, Congress usually hit the override button and postponed the cuts from taking place. That only meant the reductions got bigger the next time around.

To completely repeal the budget formula, Congress would have to come up with nearly $300 billion over 10 years in other spending cuts or tack the cost onto the deficit.

A 12-month reprieve would allow time to devise a different system for paying doctors. There’s widespread recognition that the current system is flawed because it rewards sheer volume of services, not quality results.