Medicare Fee Cut Averted! – Continued

Date: July 17, 2008

As we told you the other day, Congress passed the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), also known as H.R. 6331. Yesterday, July 15, Congress sent the bill to President Bush and he vetoed it. Both houses of Congress promptly voted to override the veto so the bill now becomes law, retroactive to July 1.

What does this mean for you?

  • The Medicare physician fee cut has been averted. You will be paid for the rest of 2008 at the rate that has been in effect for the first half of 2008. There is also a small additional increase in 2009.
  • During the first two weeks of July, CMS instructed the Medicare contractors to hold claims while Congress deliberated. Two weeks (10 business days) is the maximum time they are permitted to do this. Since the bill passed only yesterday, the contractors will begin today to process claims using the reduced rates that would have taken effect July 1 if Congress did not act to stem the fee cut. The contractors’ computer systems were programmed with the reduced rates quite some time ago.
  • It will take the Medicare contractors about 2 more weeks to restore the old fee schedules in their systems. Any claims that are paid at the lower rates will automatically re-process for additional payment over the next few months.

Corcoran Consulting Group recommends that you continue to hold your claims until the Medicare contractors have updated their systems (i.e., about August 1) so that you can avoid the trouble and administrative difficulty associated with having the claims processed twice. Even if you have to take out a loan to cover this time period, you will be better off.

  • The cost of borrowing money for 1 month is about 0.3% of the loaned amount, while the administrative cost of double-processing payments is about 6% of the collected amount. Remember that reprocessing affects both Medicare and secondary insurance plans.
  • If you do file claims in July and are paid at the incorrect rates, then your Medicare beneficiaries will receive EOBs that will confuse them, and create a lot of hard feelings when they later see a second EOB as well as a balance due. This will increase your administrative costs because staff will get a lot of telephone calls from irritated patients. The cost associated with patient confusion and ill will is not quantifiable but very real.

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