Jul. 2--SANTA FE -- A sharp decrease in Medicare payments to physicians could have a devastating impact in New Mexico, where 290,000 senior citizens receive government-sponsored health care, top state officials and health care leaders said Tuesday.

If a 10.6 percent cut in Medicare reimbursement rates -- that technically, if not practically, went into effect Tuesday -- isn't overturned, many physicians would be forced to refuse service to qualified seniors in order to stay afloat, the officials said.

Senior citizen groups say many seniors are already having a tough time finding providers.

"For a state like New Mexico, it's a tragic hit to the system," state Health Secretary Alfredo Vigil said.

Sen. Jeff Bingaman, D-N.M., held a roundtable discussion Tuesday in Santa Fe to "sound the alarm" about a bill being blocked in the Senate that would have prevented the cut and replaced it with a modest increase in the reimbursement rate.

Bingaman, who helped draft the legislation, said he's hopeful the bill will be revived when Congress reconvenes next week.

But he acknowledged stopgap measures aren't the ultimate solution to fixing Medicare, which provides coverage to 44 million seniors nationwide.

"We need to fix the bigger problem," said Bingaman, who added that such a task will likely fall to the nation's new president and Congress.

The reduced Medicare reimbursement rate won't go into immediate effect because the Centers for Medicare and Medicaid Services has, at the Bush administration's urging, instructed contractors to delay the processing of Medicare claims during the first 10 business days of July.

However, New Mexico physicians fear if Congress doesn't act to restore the reimbursement rates soon, they could be forced to lay off workers or turn away Medicare patients.

"The ethical dilemma it puts us in is remarkable," said Barbara McAneny, the chief executive officer of the New Mexico Cancer Center.

"There's a threshold out there beyond which people can't keep their doors open," added Jerry McLaughlin, a Hobbs obstetrician and gynecologist who is the former president of the New Mexico Medical Society.

The cut to the Medicare reimbursement rate was scheduled because of the Balanced Budget Act of 1997, which has formula requiring fee cuts when federal spending exceeds set goals. Lawmakers had hoped to come to an agreement on how to prevent the cut from taking place before Tuesday.

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Gov. Bill Richardson also weighed in on the issue Tuesday, describing the situation as "another case where the federal government is abandoning its responsibility."

President George Bush has threatened to veto the Democrat-backed bill if its approved by Congress.

The Associated Press contributed to this report.