The Center for Medicare and Medicaid Services (CMS) has said Medicare's physician reimbursement will be cut 4.3% in 2006. Medicare spending on physician services rose 15% in 2004 because of greater use of office visits, minor procedures, high-end imaging scans, laboratory services and in-office prescription drugs, the agency said in a letter explaining the cut to the Medicare Payment Advisory Commission. The American Medical Association has again called on lawmakers to revise the current Medicare formula for establishing physician reimbursement and said the reimbursement cut would threaten seniors' access to care. The cuts are driven by an inequitable and unsustainable formula called the Sustainable Growth Rate (SGR) that determines Medicare physician payment updates. The AMA is of the opinion that physicians are penalized with lower payments when growth in use of medical care exceeds Gross Domestic Product growth.
Service use is driven by patient needs, new technology, and public policies that encourage patients to seek care, none of which physicians can control. The CMS fails to include numerous policy changes in the SGR, such as new Medicare covered benefits that help to drive utilization increases. Because CMS includes the cost of physician-administered drugs in its calculations of Medicare Spending for physician services, drug spending consumes an ever-growing share of the SGR and is a major factor in projected pay cuts.
One in 10 practicing physicians said they would retire if Medicare payments fall 5% next year, according to an e-mail survey of 5,486 doctors conducted in February and March by the American Medical Association. Just over 60% of the physicians said they would put off purchasing new equipment, and 38% would accept fewer Medicare patients. The AMA has stated to Congress that Medicare payments to physicians already seriously lag behind the increasing cost of providing medical care. If Congress and the Bush administration don't act soon, Medicare reimbursement cuts of 26% over the next six years will drive many physicians out of business.
Organized medicine is asking Congress to prevent physician payment cuts that will go into effect on January 1, 2006. The AMA would like the administration to remove drugs costs from the SGR, which would significantly reduce the cost of legislation to preserve Medicare patients’ access to physician services. In addition, the Medicare Payment Advisory Commission (MedPAC) has recommended that Congress scrap the SGR and adopt the same approach for physician payment updates that is used for hospitals and other Medicare providers. Under this approach payments would reflect practice cost increases.
What can you do?
AMC/NOMA members are encouraged to write to their members of Congress to: prevent physician payment cuts that will go into effect on January 1, 2006 and ask Congress to replace the sustainable growth rate (SGR) with a payment system that reflects the increasing costs of physician provided care. For more information on this issue go to the AMA web site at www.ama_assn.org AMC/NOMA members can access their members of Congress through the legislative link on our web site at www.amcnoma.org.