Medicare payment cuts may drop to decade-low levels

     Physicians are facing, what may be, the most dramatic Medicare payment cuts in a decade.  Currently, the Medicare Payment Advisory Commission estimates that physicians will face a cumulative 17% cut in payments through the next four years, resulting in reimbursements levels lower than those seen in 1993.

     MedPac is recommending that Congress adopt a new formula to update payments for physician services.  The new formula would base reimbursement updates on the estimated change in physicians’ costs for the coming year, minus an adjustment for gains in productivity.  The physician update for 2002 would than be at 2.5% for the year 2002, as oppose to 5.4% under the present formula.

  MedPAC (The Medicare Payment Advisory Commission) is an independent federal body that advises the U.S. Congress on issues affecting the Medicare program.  The commission was established by the Balanced Budget Act of 1997 and is made up of seventeen members from diverse expertise in financing and delivery of health services, which meet publicly to discuss policy issues and formulate recommendations to the Congress on improving Medicare policies.    In addition to advising Congress on payments to health plans participating in the Medicare + Choice and providers in Medicare’s traditional fee-for-service program, MedPAC also analyzes access to care, quality of care, and other issues affecting Medicare.

     The current formula for payment reimbursements doesn’t provide an incentive for an individual physician to control volume, but many lawmakers believe that without limits on physician payment, Medicare spending could get out of control.