President Bush Wednesday signed the federal budget package, reversing the 4.4 percent cut to Medicare physician payments that took effect January 1. The Centers for Medicare & Medicaid Services (CMS) has instructed carriers to retroactively adjust claims to compensate physicians for the 4.4 percent cut. Physicians will not have to resubmit claims. Medicare carriers will automatically make retroactive payments for eligible claims.

NHIC, California’s Medicare carrier has informed CMA that it will be posting the revised 2006 fee schedules on its website no later than Friday, February 10. The new fee schedule is effective immediately. Physicians should download the new fee schedule as soon as possible, as many of the RVUs have changed.

The budget bill does not fix the flawed geographic payment (GPCI) formula or provide a permanent solution to the sustainable growth rate (SGR) problem. Under the current SGR formula, physicians are due to face another reduction on January 1, 2007. Although MedPAC, the independent body that advises Congress on Medicare issues, has recommended a 2.8 percent payment increase for physicians in 2007.

The Bush Administration this week released its proposed 2007 budget, which calls for $36 billion in Medicare program cuts. Although the budget proposal does not include the recommended 2.8 percent physician rate increase, the administration recognized that physicians are facing multiple years of steep cuts and expressed interest in pursuing physician payment reform this year. However, the President said payment reform must be budget neutral and linked to quality reporting.

CMA and AMA will continue to aggressively advocate for a fair physician payment formula that is based on actual practice costs.

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