CMS Likely To Reduce Medicare Physician Reimbursements by 4.6% in 2007

CMS likely will reduce Medicare reimbursements to physicians by 4.6% in 2007 because of increased program spending on physician services, Herb Kuhn, director of the Center for Medicare Management at the agency, said on Friday in a letter to Glenn Hackbarth, chair of the Medicare Payment Advisory Commission, CQ HealthBeat reports.

CMS revises Medicare reimbursement rates for physicians annually based on physician costs with an additional adjustment based on a comparison of program spending on physician services with the sustainable growth rate. CMS reduces Medicare reimbursements to physicians when program spending on physician services exceeds SGR.

For 2007, CMS estimates SGR of 0.7%. Medicare spending on physician services -- such as evaluation, management, imaging and laboratory services -- increased by 8.5% in 2005, and increases in the volume and intensity of services accounted for 7.5 percentage points of the increase, Kuhn said.

Duane Cady, chair of the American Medical Association, said that the scheduled 4.6% reduction in Medicare reimbursements to physicians in 2007 represents the first in a series of reductions that will decrease reimbursements by 34% over the next nine years, during which time physician costs likely will increase by 22%. He said, "The government is asking physicians to do the impossible: Keep seeing patients and improve the quality of care, while accepting drastic cuts that don't come close to covering the cost of health care. Many physicians are left with no choice but to limit the number of Medicare patients in their practices."

According to CQ HealthBeat, lawmakers could move to prevent the scheduled 4.6% reduction in Medicare reimbursements to physicians in 2007. CMS had planned to reduce Medicare reimbursements to physicians by 4.4% in 2006, but lawmakers prevented the move before they adjourned for the year in December 2005 (Carey, CQ HealthBeat, 4/10).