Medicare Proposes 9.9% Physician Payment Cut
[Posted 07/12/07]

The Centers for Medicare, Medicaid Services (CMS) last week announced it would cut physician payments by nearly 10 percent in 2008. Despite a recommendation from the Medicare Payment Advisory Commission (MedPAC) that doctors payment rates be increased by 1.7 percent in 2008, CMS was required to slash rates because of the flawed sustainable growth rate (SGR) formula.

For the past five years, it's been an annual cycle: CMS proposes pay cuts and outraged physicians and medical associations demand that Congress reform the broken payment system. Unable to come to an agreement on a long-term fix, Congress then acts at the last minute to stop the cuts. What makes this year different is the magnitude of the cut. Doctors face a 9.9 percent cut in 2008 because Congress blocked the scheduled cuts over the past five years, increasing rates 1.6 percent in 2003 and 1.5 percent in 2004 and 2005. Congress froze rates in 2006 and 2007.

Physicians must contact their members of Congress and tell them to stop the 10 percent cut, says CMA President Anmol S. Mahal, M.D. Physicians cannot sustain such an enormous cut when our rates are already less than those paid by Medicare in 2001.

If Congress fails to reform the flawed payment formula, projections have physician reimbursement being cut by roughly 40 percent over the next nine years. Practice costs are expected to increase 20 percent during that same time period.

CMA recently submitted to Congress a multipronged proposal to overhaul the broken payment system. The proposal would, among other things, eliminate the SGR formula and provide payment updates based on actual practice cost increases.

Democratic leaders in the U.S. House of Representatives are feverishly working on legislation that incorporates many elements from CMA's reform proposal. Their plan would stop the 10 percent physician pay cut and institute payment increases for two to three years or until a long-term alternative to the SGR payment system can be crafted. The legislation would also fund the reauthorization of the Healthy Families program that has covered uninsured children in California for nearly a decade.

These reforms would be paid for by increasing the tobacco tax, which would raise $35 billion, and equalizing Medicare Advantage health plan rates with fee-for-service rates. Currently, Medicare Advantage plans receive on average 12 percent more than fee-for-service physicians for providing the same services to Medicare beneficiaries. Bringing plan rates in line with fee-for-service physician rates could save as much as $65 billion. This legislation could come up for a vote in the next few weeks.

Please contact your members of Congress immediately and tell them to support Medicare payment reform.

Click here for talking points.

Call AMA’s grassroots hotline at 800/833-6354, enter your zip code when prompted and you will be automatically connected with your representative.

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