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AP Newsbreak: Medicare cuts could hit Jan. 18

WASHINGTON (AP) -- Raising the stakes for a gridlocked Congress, Medicare officials said Tuesday hundreds of thousands of doctors will get a steep cut in payments on Jan. 18 unless lawmakers issue a reprieve.

A provision waiving a scheduled 27.4 percent cut in physician reimbursement was included in the payroll tax legislation now ensnared in partisan political wrangling between the House and Senate.

The recurring threat of cuts to doctors is perhaps the most visible symbol of Medicare's financial problems. Reductions are required by a 1990s budget law that failed to control spending but never got repealed. Instead, Congress passes a temporary fix each time, only to grow the size of cuts required next time around.

Medicare sent an alert to some 650,000 doctors on Monday telling them it will hold claims for the first 10 business days of 2012 unless Congress acts to waive the cuts.

On Tuesday, deputy administrator Jonathan Blum said holding claims any longer than that could cause Medicare's computers to crash. That disclosure may come as a shock to lawmakers, since Medicare was able to hold claims for more than 20 days during a similar standoff last year during the summer.

"I want to emphasize that history cannot be applied to this situation," Blum told The Associated Press. "We feel that (Medicare) came very close operationally to crashing our system back in 2010. From a stewardship perspective, that is something we feel we can never repeat again."

Blum said Medicare has told the contractors who handle its bills to start paying claims for 2012 at the lower rate on Jan. 18.

"If there is no legislation, those claims will be paid on Jan. 18 taking into account the 27-percent reduction," he said. One factor that worries Medicare is that the volume of claims is expected to be higher in winter months than during the summer, when the previous prolonged standoff over doctor cuts took place.

After that experience, Medicare also heard from many doctors who said their practices suffered considerable financial problems because of the delays in payment.

"It was tremendously disruptive," said Blum. "What doctors told us afterwards is that it was better to provide some cash flow than no cash flow."

The cuts - if allowed to go through - could undermine care for millions of elderly and disabled Medicare beneficiaries, as well as military retirees. Payment rates in the Pentagon's program are pegged to Medicare. Doctors are not the only medical providers affected. Therapists, nurse practitioners and other professionals are also covered by the same payment system.

The American Medical Association was hoping for a permanent repeal of the payment formula this year. That was thwarted by the failure of the congressional supercommittee to come up with a bipartisan plan to reduce government debt.

The payroll tax bill approved by the House included a two-year reprieve for doctors. But that was whittled down to two months in the compromise tax legislation overwhelmingly passed by the Senate passed last week, and intended as a place-holder to buy a little more time for lawmakers to negotiate. Now House Republicans are rejecting that deal.

The AMA says the annual spectacle is eroding the confidence of doctors and patients. "Waiting until the last week of the legislative session to address a problem that Congress knew was coming all year is not the way to conduct our nation's business," said AMA President Peter Carmel.



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