View from Washington – What Changed with the Physician Payment Vote

Since the July 9, 2008 vote in the U.S. Senate on H.R. 6331, a House-passed bill to extend a prohibition on a scheduled Medicare physician fee cut, many policy watchers have argued that the political landscape in Washington has changed for consideration of other healthcare legislation. However, with that vote, a decision about a pressing policy question was sidestepped and left for another day.

To note the philosophy of the wise farmer “Life is simpler when you plow around the stump.” The stump Congress faced was the united front of the medical community in their opposition to a scheduled 10.6 percent reduction in Medicare physician fee payments.

The House of Representatives responded first to the pressure from the medical community and came up with a legislative fix, to extend for 18 months a prohibition on a scheduled Medicare physician fee cut. The bill was passed on a 355 to 59 vote after fierce lobbying by medical interest groups, effectively led by the American Medical Association (AMA). Congressmen were told to vote for H.R. 6331 or doctors back home would actively support whoever ran against them in the next election. Under the withering lobbying campaign, ultimately, 18 Senate Republicans factored in a 69 to 30 vote to approve H.R. 6331.

Historical significance
The bill was the latest effort in legislative interventions prohibiting scheduled Medicare physician payment reductions put in place in 1997. Estimates are that current Medicare regulations have required a 5-percent reduction in physician payments each year since 2002. Given the formula in the 1997 legislation, with the adoption of H.R. 6331, doctors will now be facing an estimated 20-percent reduction in Medicare payments in 2010. The vote on H.R. 6331 left the fundamental policy question about what to do with the Medicare physician payment mechanism for another day. Congress simply plowed around the political/policy stump before them.

Doctors are celebrating their win. However, to permanently fix the problem, various medical specialties know they will have to come together to devise a new formula – one that would by necessity have redistributive effects among those specialties. What are they up against? It is nothing less than an accelerating problem for their profession. The Congressional Budget Office (CBO) says that if Congress repeals the current payment system and allows physician payments to grow at the rate of medical inflation as physicians now argue for, the increased costs to Medicare would be an estimated $65 billion the first five years and nearly $200 billion in the subsequent five year period.

It is a fair bet that next year, the infighting among specialists will be deafening as they jockey for position on a new Medicare physician payment system. Given the temporary beating physicians gave Congress on the recent Medicare bill and a chance that specialties will not come to uniform agreement in the coming year on a new payment system, it might be wise to again heed the advice of the wise farmer. He might just suggest to organized medicine in their approach to Congress – “Do not ever try to corner something that just might be meaner than you are.”

About the Author

Robert Betz Ph.D.
Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit