Medicare Physician Payments To Decline 4.4% Beginning March 1
Bush administration officials on Dec. 20 announced that Medicare payments to physicians will decrease 4.4% beginning March 1 as part of the program's fee schedule for 2003, the New York Times reports. Medicare reimbursement rates to physicians were cut 5.4% on Jan. 1 of this year. HHS officials said the latest round of cuts may "cause fewer physicians to accept new Medicare patients" and force some doctors to raise prices to Medicare beneficiaries. Administration officials said that a flaw in Medicare's reimbursement formula has led to the payment cuts at a time when physician expenses are rising. Under the current Medicare reimbursement formula, payments are based on Medicare enrollment and economic growth, as well as other factors (Pear, New York Times, 12/21). The Medicare payment rate cuts stem from the federal government's having underestimated both the rate of economic growth in the late 1990s and the number of beneficiaries enrolled in the fee-for-service program. Because HMOs have withdrawn from the Medicare+Choice managed care program at higher-than-expected rates, the annual Medicare payment update does not account for the one million seniors who have returned to the fee-for-service program (California Healthline, 10/25). CMS Administrator Thomas Scully said, "The reduction in physician fee schedule rates results from a formula specified in the Medicare law, and we believe that formula is flawed and must be fixed," adding that Congress should "fix the formula." The Times reports that administration officials said they do "not have the legal authority to correct" the formula. John Rother, policy director of AARP, said that the cuts are an "unintended consequence" of a flawed formula, adding, "Congress should correct it as soon as possible."
Although several lawmakers have called for increases to Medicare reimbursement rates over the previous year, legislation has failed to move through Congress (New York Times, 12/21). Legislation that would have increased Medicare provider payments has been "bogged down" because the Bush administration and Congress disagreed over increased funding for HMOs, hospitals and other providers, priorities the administration does not support. The House in November approved an unemployment benefits bill with a provision that would give CMS the authority to "fix problems" with the Medicare reimbursement formula for doctors but did not provide physicians with any funds or reverse the payment cut. The Senate approved a similar overall bill, but it did not include the Medicare provision. In June, the House passed a $30 billion Medicare reform bill that included provider giveback provisions and a prescription drug benefit, but the Senate failed several times to pass similar legislation (California Healthline, 11/15). According to the Times, some lawmakers have "insisted" if doctors receive higher Medicare payments, hospitals, nursing homes and HMOs should also receive higher reimbursement rates, which would drive up the cost of any such legislation. Rep. Bill Thomas (R-Calif.), chair of the House Ways and Means Committee, said he is "deeply troubled" by the cuts to physicians, adding, "I remain committed to addressing this issue and reforming Medicare when Congress reconvenes."
The Times reports that doctors have say they have been "shortchanged for several years" by Medicare. Doctors have said the Medicare reimbursement rates were "already too low" before this round of cuts. "Physicians cannot afford to treat Medicare patients," Dr. James Martin, president of the American Academy of Family Physicians, said. Dr. Jose Angel, president of the Iowa Medical Society, predicted Medicare beneficiaries will have to "wait longer and travel farther" to receive services from a physician. Dr. Mark Krotowski, a family physician in Brooklyn, said of the new cuts, "Doctors will not have any incentive to accept new Medicare patients. While Medicare reimbursements are going down, our expenses are rising 5% to 10% a year" (New York Times, 12/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.