Physician payments are likely to decline by 40% from 2005 to 2014 unless Congress or the CMS acts to change the formula Medicare uses to calculate annual adjustments. That's the prediction made in a letter sent to CMS Administrator Mark McClellan by Senate Finance Committee Chairman Charles Grassley (R-Iowa) and ranking member Max Baucus (D-Mont.).Under the SGR, physician rates are adjusted up or down annually to meet an established target for spending on physician services. Last year's Medicare reform law gave physicians a 1.5% payment increase in 2004 and 2005, averting a scheduled decrease for those years under the SGR. The General Accounting Office has said that without changes to the SGR, it is likely that physicians will experience annual pay cuts of about 5% for seven consecutive years starting in 2006.