Congress failed to stop a 10.6 percent cut to the physician reimbursement rate that goes into effect this month. The House passed the bill 355 to 59 June 24. Two days later, the Senate failed by one vote to veto-proof the bill, gathering 59 votes in favor of the legislation.

At odds over the cut are traditional Medicare acceptors, such as doctors and hospitals, and health insurers, who offer Medicare Advantage, a private fee-for-service program reimbursed by the government at rates 19 percent higher than standard Medicare. Medical professionals are asking for cuts to the Medicare Advantage program, despite a threatened veto by President Bush, who said he opposed cuts to health insurers.

In a statement, Senate Majority Leader Harry Reid of Nevada commended the House for passing the bill, but criticized Senate Republicans who sided with the president.

Richard and Paula Higgins attend a town hall meeting discussing Medicare reforms at the Henderson Senior Center in 2003. Robert Mohr and Pat Wilson listen in the background. STEVE MARCUS / STAFF PHOTOGRAPHER

The bill "ensures Medicare works better for every American senior and saves taxpayers billions of dollars," Reid said in the statement, "but Senate Republicans insist on standing with President Bush to protect insurance companies at the expense of patients and providers. This is nothing short of putting politics above the seniors and people with disabilities who depend on Medicare."

Congress is expected to revisit the cut when it returns from the Independence Day holiday July 7.

Taking funds set aside for health insurance companies and their Medicare Advantage products to fund traditional Medicare will only hurt senior citizens, said Karen Ignagni, president and chief executive of America's Health Insurance Plans, a national association representing health insurers.

And with rising health care costs, reducing Medicare Advantage products developed to improve health care services "seems to be counterintuitive," she said.

She said those most affected would be low-income senior citizens, but the state's medical association's chief, Larry Matheis, said those low-income Medicare beneficiaries often can't afford to buy into the product.

In Las Vegas, UnitedHealthcare, Cigna, Humana and Anthem offer Medicare Advantage.

According to the Kaiser Family Foundation, a nonprofit, nonpartisan health care research organization, in 2007, 80 percent of Medicare beneficiaries use the traditional service, and 20 percent pay into Medicare Advantage plans, which were paid $67 billion last year by the government. Medicare Advantage plans are reimbursed at 119 percent, compared with traditional Medicare at 100 percent, by the federal government.

Ignagni said the question is not whether physicians should be compensated more - she agrees that they should - but how the increases should occur.

In the 1990s, funds to Medicare Advantage were decreased, and the number of plans fell.

The cuts are already causing 40 percent to 50 percent of doctors to reconsider the services they provide to Medicare beneficiaries, Matheis said.

"This is as serious as it gets," he said.

Medicare is a federal health insurance program available to people age 65 and older and those with disabilities.

Nationwide, physicians are projected to be reimbursed $57 billion this year. Next year, with another 5 percent cut that goes into effect in January, reimbursements are expected to dip to $54 billion, according to a June 30 Medicare release. Medicare is accepting comments on those cuts.

This is the second time in the past several months that doctors faced cuts. In December, the government postponed the cut until July 1. Now, doctors are once again waiting to see what is going to happen.

This alone was enough to persuade some doctors to make cuts of their own, Matheis said.

Over the past seven years, doctors serving Medicare patients have endured annual cuts and uncertainty because of the program, Matheis said. This alone has led to more doctors seeing fewer Medicare patients, and some will not treat new Medicare beneficiaries.

Historically, 80 percent to 85 percent of physicians accepted Medicare, Matheis said. This is changing as 40 percent to 50 percent of doctors are considering whether to continue seeing those patients.

"It makes the program so unpredictable for doctors," he said, adding they are already reimbursed at a lower rate today than in 2001. "It's causing a real access problem."

The greatest hit will be to specialty physicians, who are already in great demand, he said.

Dr. Jerry Jones, president of Clark County Medical Society, agreed that doctors - especially those in underrepresented specialties - may choose not to see beneficiaries new to the Medicare program or those who have lost their doctors because of retirement or other reasons.

Even if 20 percent of doctors already accepting Medicare quit the program, that could mean "thousands" of beneficiaries won't be able to get in to see the doctor, he said.

"Physicians are very fond of their patients," Jones said, but added, "they are limited (by Medicare) on how much they can charge."

In a statement, Dr. Nancy Nielsen, president of the American Medical Association, called the Senate's failure to fend off cuts "the brink of a Medicare meltdown."

"It boils down to this - insurance company profits or patients and the physicians who care for them," Nielsen said. "America's physicians urge senators who voted against action to use this holiday recess to review the facts about (the bill) and then take immediate action upon their return to Washington."

The cuts are threatened as a large portion of the population - the first Baby Boomers born in 1946 - are three years away from Medicare eligibility.

There are 322,000 Medicare beneficiaries in Nevada, or 13 percent of the population, according to AARP, a group representing people age 50 and older.

"We're asking our senators to keep Medicare fair by passing ... the Medicare Improvements for Patients and Providers Act," said Deborah Moore, AARP Nevada spokeswoman, in a statement. "The bill will help people in Medicare by maintaining their access to doctors, implementing electronic prescribing and bolstering Medicare's low-income programs."

With the potential of fewer doctors seeing Medicare patients, the options for those patients start to thin. Either they wait until an illness has progressed to acuteness or visit a hospital's emergency room for a common cold. The loss hospitals incur cannot be absorbed since they already operate under 1.2 percent profit margins, said Dwight Hanson, finance director for the Nevada Hospital Association.

Insurance companies operate under 10 percent profit margins.

Cuts to Medicare, and even Medicaid, can have what Hanson terms a "cost spiral" effect.

Medicare reimburses hospitals at a flat rate, covering 87 percent of the cost hospitals incur, Hanson said. The 13 percent is a loss to hospitals and "has to be passed on to somebody," he said.

Nicole Lucht covers health care, workplace and banking issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-8832 or nicole.lucht@lasvegassun.com.