The Honorable Senator Voinovich
United States Senate
Senate Office Building
Washington, DC 20510

Dear Senator Voinovich:

The Academy of Medicine of Cleveland/Northern Ohio Medical Association (AMC/NOMA) representing over 3,000 physicians in the Northern Ohio region appreciates greatly the efforts of Congress to prevent a 4.4% reduction in physician reimbursements from being implemented in 2003. We were optimistic that the action taken would prevent future payment cuts. At the time, Centers for Medicaid and Medicare Services (CMS) told Congress that the legislation would produce positive updates for the next few years. However, CMS has announced that the 2004 update would be a negative 4.2% with cuts continuing through 2007. A cut in 2004 would be the fifth for physicians since 1991.

This outcome does not reflect the intentions of Congress. Rather, it is an unintended consequence of an unworkable physician payment formula. The current Medicare update formula for physicians is based on a spending target known as the sustainable growth rate (SGR.) The use of the SGR in physician reimbursements is flawed and threatens patient access to physician services.

The Medicare payment formula that determines how much physician services are worth is unfair, unpredictable and must be replaced. This formula, which is tied to the GDP, pays no attention to practice costs. It disregards physicians' obligations to patients whose medical needs do not shrink whenever the economy slows. In addition, the physicians in Northern Ohio have been hit very hard by the increase in medical malpractice premium payments. From 1991-2003, payment rates for physicians fell 14% behind practice cost inflation as measured by Medicare's own estimates. Even the 1.6% increase for 2003 was only about half the 3% rise in practice cost inflation estimated by CMS.

The disparity in Medicare payment increases, coupled with the increase in overhead and costs incurred by physicians in Northern Ohio due primarily to an increase in medical malpractice costs, is forcing physicians in our area to consider some unfavorable possibilities. These possibilities include whether or not to continue to participate in the Medicare program, consider layoffs of staff, put of purchase of equipment used for diagnosis and treatment, or reduce services to Medicare patients.

The physicians in Northern Ohio need your help. Please support legislation that would replace the -4.2% cut for 2004 with a 2.5% increase and replace this flawed formula with one that works for Medicare patients and the physicians who serve them.

Sincerely,

James Lane, M.D.
President
Academy of Medicine of Cleveland/Northern Ohio Medical Association