Current law requires the Centers for Medicare & Medicaid Services to adjust the Medicare Physician Fee Schedule (MPFS) payment rates annually, based on an update formula which requires application of the Sustainable Growth Rate (SGR) that was adopted in the Balanced Budget Act of 1997. 

This formula has yielded negative updates every year beginning in CY 2002, although CMS was able to take administrative steps to avert a reduction in CY 2003, and Congress has taken a series of legislative actions to prevent reductions in CYs 2004-2009. 

The recommended cuts in the past have been far smaller than the 21.2 percent reduction mandated this year, which was announced in late 2009.

On March 1, the doctors were to be hit with the 21 percent reduction in the amount they are paid for treating Medicare and TRICARE beneficiaries. Efforts by Democrats to correct this mandated reduction has been blocked by Republicans. Physicians, meanwhile, are talking of reducing services to senior citizens on Medicare unless the pay cut is reversed.

Democrats and the American Medical Association were able to delay the implementation date to April 1 but were still unable to budge Republicans.

The Obama administration directed Medicare billing contractors to hold off processing claims for 10 business days in the hopes that senators could break the deadlock before lower payments are issued.

Medicare normally pays doctors about 14 days after bills are submitted, which would mean the pay cut can be avoided until April 15.

Still, however, Congress has not acted.

"Congress has already missed the deadline for new legislation to block cuts of 21% in Medicare payments to doctors,” according to The Wall Street Journal's Health Blog.

“The pay reduction officially took effect April 1, but the Centers for Medicare and Medicaid Services — the federal agency that oversees the giant health systems — put a hold on processing physician payments for 10 business days, effectively pushing off the bite on payments for physicians' services until April 15. So that's the new deadline facing Congress if it wants to pass a new law delaying the cuts from really going into effect" (White, 4/13),”

The Denver Post says, "Doctors say another temporary fix is inadequate. Instead, they are pushing for a permanent change in law, a solution estimated to cost about $220 billion over the next decade. ... Medicare patients typically are more complicated to treat — more diseases, more prescriptions to manage. ... Under the previous rates, doctors were paid $95.43 by Medicare for a new-patient visit. The cuts that went into effect April 1 knocked the reimbursement down to $75.20, according to the Colorado Medical Society." The Post interviewed a patient whose doctor "fired" her, saying the Medicare reimbursement is inadequate (Brown, 4/14).

Meanwhile, The Green Bay Press Gazette reports: "Wisconsin doctors and hospitals treating Medicare patients can expect a modest bump in pay as a result of provisions in the new health-care law. U.S. Rep. Ron Kind, D-La Crosse, and a group of lawmakers from the Midwest and Pacific Northwest fought hard to get them," withholding support of the health reform bill until they negotiated a deal. "What they got was $800 million for immediate payments for doctors and hospitals and a commitment from the administration to a value-based system for paying physicians and other providers." The changes affect doctors in the Midwest and Pacific Northwest who have "traditionally have received less for treating Medicare patients than their counterparts in other parts of the country" (4/14).