House votes to eliminate Medicare physician pay formula

December 3, 2009

The U.S. House of Representatives has passed a bill that would abandon the current Medicare physician payment formula and allow future rates to increase based more closely on physicians? costs, a revision that is expected to cost approximately $210 billion over 10 years.

The U.S. House of Representatives has passed a bill that would abandon the current Medicare physician payment formula and allow future rates to increase based more closely on physicians’ costs, a revision that is expected to cost approximately $210 billion over 10 years.

By a vote of 243-183, the House approved the Medicare Physician Payment Reform Act of 2009. The measure would reverse a 21.2% payment cut planned for Jan. 1, 2010, eliminate the accumulated physician spending debt, and implement a new formula.

The new spending growth rate target for physician services would be equal to the gross domestic product plus 1%. Preventive care and evaluation and management services would have a separate target of gross domestic product plus 2%, allowing primary care pay to increase at a higher rate over time.

American Medical Association President J. James Rohack, MD, said the House vote is the first step toward preventing the 21% payment cut and eliminating the formula "that creates a roller coaster of uncertainty for seniors and physicians who care for them. Promises have been made to seniors and military families, and the House recognizes that those promises must be kept."

The White House issued a statement strongly supporting the House vote: "President Obama commends the House of Representatives for taking action to protect the care and physician choice that Medicare beneficiaries and TRICARE patients have earned," said White House Press Secretary Robert Gibbs. "The Medicare Physician Payment Reform Act includes key provisions to update the payment system-including eliminating the steep payment cut scheduled for 2010, consistent with the President’s FY 2010 budget proposal."

The Senate must still approve the legislation before it can head to President Obama’s desk.