The U.S. House of Representatives Wednesday approved the federal budget package, freezing Medicare physician reimbursement at the higher 2005 rates for one year. The legislation, which does not include any pay-for-performance provisions, now goes to the president for his signature.

The payment freeze reverses the 4.4 percent cut that took effect January 1. The Centers for Medicare & Medicaid Services (CMS) has agreed to retroactively adjust claims to compensate physicians for the 4.4 percent cut once the payment freeze is signed into law. Physicians will not have to resubmit claims. Medicare carriers will automatically make retroactive payments for eligible claims.

Although the 2006 Medicare participation enrollment period is over, CMS has indicated that it will allow physicians to retroactively change their participation status.

The budget bill does not fix the flawed geographic payment (GPCI) formula or provide a permanent solution to the flawed sustainable growth rate (SGR). CMA and AMA will continue to aggressively advocate for a fair physician payment formula that is based on actual practice costs.

As this is a one-year freeze, Congress will have to deal with the Medicare payment issues again very soon. Having this issue before Congress in an election year will give CMA improved leverage as the association continues to aggressively fight for a real fix to Medicare’s SGR and GPCI formulas.

Contact: Elizabeth McNeil, 415/882-3376 or emcneil@cmanet.org.