Don’t Let Up: Tell Congress They Must Stop Medicare Physician Payment Cuts During Lame-Duck Session
[Posted 10/05/06]

Congress adjourned last week without having fixed the Medicare physician payment problems. Despite bipartisan support from most members of the California Congressional Delegation, the Republican leadership in the House and Senate could not agree on a plan to stop the physician payment cuts. Although Congress will briefly reconvene after the November elections, these lame-duck sessions have historically been short and unproductive.

If Congress does not act before the end of the year, physician payments will be cut by 5 percent on January 1 and by a total of 37 percent over the next six years.

The cuts are an unintended consequence of a formula, established under laws passed in 1989 and 1997, that was supposed to establish a “sustainable growth rate” for spending on doctors’ services. The formula allows Medicare spending on physician services to grow at the rate of the gross domestic product (GDP), but it actually penalizes physicians because the cost of physician services rises more rapidly than the GDP.

Reimbursement for all other Medicare providers is calculated using the Medicare Economic Index (MEI), which is a market index of actual medical practice costs. Health plans, hospitals, and nursing homes are all seeing payment increases, while physician payments are being slashed.

The inequities are glaring:

These cuts come at a time when medical practice costs are soaring. Over the last five years, the average cost to run a medical practice has gone up at least 18 percent, yet Medicare is still paying physicians the same rates they did in 2001. By 2007, Medicare physician payment rates will effectively have fallen by more than 20 percent.

CMA urges physicians to meet with their members of Congress to express their outrage and extreme disappointment that the Republican-led Congress again failed to fix the physician payment problem. They need to understand that this is an urgent issue and that failure to reform the Medicare payment formula will force physicians to stop accepting new Medicare patients or withdraw from the program entirely. Tell your members of Congress to dump the flawed SGR physician payment formula and replace it with a new formula based on the MEI, which would increase physician payments by 2.8 percent in 2007.

Although fixing the SGR is CMA's top Medicare priority, the association continues to urge Congress to fix the outdated geographic payment localities and to do so before the geographic practices cost index is updated next year.

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