A last-minute Bush administration decision may have given physicians a temporary reprieve from a looming 10.6 percent cut in Medicare payments, but those in the health care industry say that isn't a fix to a system becoming increasingly broken.

Under political pressure from doctors, the Centers for Medicare & Medicaid Services decided Monday to freeze the reimbursement cut that was set to go into effect today. The decision does not block the cuts, but gives lawmakers time to take action when Congress returns from a July Fourth recess.

Doctors have been threatening to stop seeing new Medicare patients, and American Medical Association President Dr. Nancy Nielsen said, "we stand on the brink of a Medicare meltdown."

If the cuts were to go into effect, the financial impact would translate into a $230 million cut in payments to Virginia physicians over the next 18 months, according to the AMA.

For Carilion Clinic, which employs 450 physicians, the reimbursement cut would equate to a $6.2 million cut in the annual budget, said Hugh Thornhill, a vice president with the Roanoke-based health system.

While physician reimbursements are just a piece of Carilion's contact with Medicare, Carilion Chief Financial Officer Don Lorton said Medicare "is the biggest issue in health care finance."

Even though the cut in reimbursement rates isn't a surprise, it has become an annual standard for Congress to step in and block it through temporary measures.

Congress, not willing to face millions of angry seniors at the polls in November, will likely act quickly when it returns to Washington next week to prevent the cuts in payments for some 600,000 doctors who treat Medicare patients.

Several years ago, Congress created a Medicare funding formula that requires fee cuts when spending exceeds established goals.

The temporary measures passed by Congress have become so commonplace that Thornhill said Carilion doesn't even budget for the cuts.

"If we budgeted for a $6.2 million cut, we would have to make significant changes to how we do business," Thornhill said.

Although the reimbursement rates affect all physicians who treat Medicare patients, the situation can be different for smaller practices versus the larger groups such as Carilion, said Dr. Roger Hofford, a Roanoke-area family physician who also sits on executive committee for the Virginia Academy of Family Physicians.

"Basically, for family physicians, Medicare doesn't pay the full cost," Hofford said.

"The challenge for all physicians is that, with overhead going up because of inflation and unfunded government mandates, it is becoming more difficult to run a practice."

Patients could see the impact in both the quality and expense of health care, Hofford said.

One likely result could be a doctor's having to see more patients per hour, meaning the doctor spends less time with each patient.

Financially, the cost burden does shift to commercial insurers. For that reason, Anthem of Blue Cross and Blue Shield has felt the squeeze from Medicare in the past.

"When government under-funds its payments to providers, the providers come to us to make up the difference," said Burke King, president of Anthem in Virginia. "That places a higher demand on us to make up the difference."

Lorton said commercial insurance companies such as Anthem tend to pay about 125 percent to 150 percent of Medicare.

Although Carilion has said it will not stop taking Medicare patients, Hofford, who runs two of Carilion's family physician offices, said small solo-practice physicians may have to cut back on the number of Medicare patients they see in order to remain financially viable.

He said he didn't know of any local practices that are in that situation.

About 18 percent of the patients seen by Carilion are on Medicare, Thornhill said. That population, however, makes up about a third of the patient volume because Medicare patients are more likely to visit the doctor, he said.

Still, about half of Carilion's physicians are not accepting any new patients because their practices are full, Thornhill said.

Kevin Schweers, a spokesman for the Department of Health and Human Services, said Monday that the government will hold doctors' Medicare claims for services delivered on or after today. Claims for services that were received on or before Monday will be processed as usual, he said.

"By holding claims for health care services that are delivered on or after July 1, CMS will not be making any payments on the 10.6 percent reduction until July 15 at the earliest," Schweers said.

Last Tuesday, the House approved legislation 355-59 to eliminate the 10.6 percent cut. Every Democrat supported it, and Republicans, bucking the president, voted 129-59 for it. But the legislation didn't get past a Senate vote Thursday.

Even if the measure is approved when Congress resumes next week, Lorton said the situation has highlighted the failures of Medicare.

"We haven't cured anything," Lorton said. "All we will have gotten is a stay of execution."

The Associated Press contributed to this report.