On December 9, the U.S. Senate passed a 1-year extension of Medicare payment rates to physicians. The bill previously was passed by the House of Representatives. President Obama is expected to sign the bill into law.

Without the new law, Medicare payments for services to physicians would have decreased approximately 20%. There has been much speculation, had this been the case, that many doctors would have stopped taking Medicare patients.

Periodic reductions in Medicare payments to doctors occur as the result of an older law that prevents medical payments from increasing more than a certain percentage per year. This older law allows medical payments to increase only in line with cost increases in other sectors of the economy. Medical costs generally increase at a faster rate than other costs. However, Congress has, over the years, permitted payments to doctors to reasonably increase in tandem with other medical costs.

Without this extension, in 2011 a 20% reduction would have gone into effect in order to retroactively offset previous increases in order to meet the requirements of the older law. At this very last moment, Congress acted to prevent the 20% decrease and to maintain current reimbursement levels. For at least another year, patients with Medicare generally should be able to maintain their current access to their physicians.