Congress’ failure to enact legislation prior to July 1, 2008 to avert the 10.6 percent Medicare physician fee schedule cut that went into effect July 1, 2008 has triggered certain CMS administrative actions.   CMS has instructed its contractors to hold claims for physician fee schedule services provided in July for the first 10 business days of July. After 10 business days, contractors will begin releasing claims into processing, which will reflect the negative 10.6 percent update. If a new law is enacted which retroactively restores funding, CMS could automatically reprocess most previously-processed claims. CMS notes that providers may hold claims until it becomes clearer whether new legislation will be enacted or until cash flow becomes problematic to reduce the need to reconcile payments and simplify beneficiary billing. CMS also has reminded providers that the exception process related to outpatient therapy caps also expired June 30, 2008 since Congress did not extend the effective date of the program. Likewise, CMS has instructed contractors that due to the expiration of statutory authority, independent laboratories may no longer bill the carrier for the technical component of physician pathology services furnished to patients of a covered hospital for services on or after July 1, 2008.  Note that while Congress subsequently passed legislation by a veto-proof margin to increase physician payments and extend these expiring provisions, the timing of enactment is still unclear (see related legislative story).