Medicare is going on a short physician payment "holiday"

Delaying reimbursements allows the federal government to shift more than $5 billion into next fiscal year to meet a spending target.

By David Glendinning, AMNews staff. Sept. 18, 2006.

Washington -- Physicians who bill Medicare for their services will not receive any reimbursements during the last week of this month, though the checks are expected to arrive soon afterward.

From Sept. 22 through Sept. 30, Medicare will postpone any reimbursements that it owes to physicians, hospitals and other program participants. All claims that are held as a result of this one-time delay will be paid on Oct. 2, according to the Centers for Medicare & Medicaid Services. Physicians will not receive any interest for the lost time value of the money, nor will the government pay any late penalty to doctors.

Congress mandated the payment hold as part of a deficit reduction act that became law in February. To achieve the legislation's target savings level, lawmakers agreed to shift the more than $5 billion that normally would be paid to Medicare participants during the last nine days of September into the next fiscal year, which begins Sunday, Oct. 1. In doing so, Congress is able to count the expenditures against next year's budget instead of the current one.

A CMS official said the agency had not received any complaints about the nine-day payment hold even after officially informing doctors and hospitals about the required move in May. The agency expects that the temporary withhold will not substantially impact the business side of physician practices.

But some physicians expressed concern about the strategy and worried that some doctors might suffer financially from being forced to forgo Medicare reimbursements for more than a week.