CMS Acts to Address 4.4% Physician Payment Cut; MEDPAC Adopts Policy for 2007
The Centers for Medicare and Medicaid last week announced plans to reprocess Medicare claims later this year to erase a 4.4% reduction in payments to providers that took effect Jan. 1 if Congress approves a freeze instead of a cut in rates. Congress late last month approved the fiscal year 2006 spending cut package, which contains a provision to freeze provider payments at current rates instead of cutting them by 4.4%. However, in approving the bill, the Senate also made several changes to provisions, forcing the legislation back to the House for approval before it can be signed by President Bush. House members are expected to vote on the measure after they return from the winter break, but CMS was required to go forward with the payment cut as scheduled. In a Jan. 6 letter to Ways and Means Committee Chair Bill Thomas (R-Calif.) Herb Kuhn, director of the CMS Center for Medicare Management, said CMS will automatically reprocess all provider claims paid at the lower rate once the budget measure is approved. He added, "Physicians and other providers will not need to resubmit their claims." CMS will combine claims, so that each provider receives a single payment to offset the cut. Reprocessing could take until July 1 because of the expected volume of claims before the budget bill is signed. He said doctors who chose to stop accepting Medicare beneficiaries because of the payment cut will be given a 45-day re-enrollment period in which they can rejoin the program.

In related news, The Medicare Payment Advisory Commission on Tuesday voted to adopt several final recommendations to Congress for fiscal year 2007, including payments to doctors that should be increased by the expected change in "input prices" for doctor care minus an adjustment for productivity gains, resulting in an overall increase of 2.8%. The cost of the increase would be $1.5 billion in the first year and $5 billion to $10 billion over five years. Other recommendations for FY 2007 included a plan to increase Medicare hospital inpatient and outpatient payments by the market basket increase minus 0.45%. The recommendation would result in a payment increase of 3.55% for inpatient care, with an adjustment for productivity.