Physicians work to avert 10.1% Medicare reimbursement cut

November 15, 2007

Under the Centers for Medicare & Medicaid Services’ final physician fee schedule, physicians will face a 10.1% reduction in Medicare reimbursement next year unless Congress steps in to circumvent the cut. The fee schedule will take effect Jan. 1, 2008.

Under the Centers for Medicare & Medicaid Services’ final physician fee schedule, physicians will face a 10.1% reduction in Medicare reimbursement next year unless Congress steps in to circumvent the cut. The fee schedule will take effect Jan. 1, 2008.

Congress must either find surplus funds or cut the budgets of existing programs to balance the increased cost of Medicare services; otherwise, the fee schedule will go through as planned. House leaders championed provisions adopted under the State Children’s Health Insurance Program (SCHIP) reauthorization bill, but the provisions were cut in an attempt to maintain a veto-proof Senate majority. A presidential veto sank SCHIP in October.

Representatives of the AMA and American College of Physicians called upon legislators to “step in to replace the cut with payment increases that keep up with medical practice costs,” and warned that if the fee schedule goes through, 60% of physicians will be forced to accept fewer Medicare patients. Among their suggestions was to use the $54 billion in what doctors view as excess payments to private Medicare health plans to offset the cut.

Kenneth L. Noller, MD, an obstetrician-gynecologist representing The Alliance of Specialty Medicine, of which AUA is a member, told the House Committee on Small Business last week that future Medicare cuts “make it a very uncertain time for solo and small practices.”

“Many physicians will be forced to reconsider their participation in the Medicare program or restrict the number of new Medicare beneficiaries they are able to accommodate in their practices,” he said. “For patients, this might mean finding a new doctor or waiting longer for an appointment.”

A statutory formula requires CMS to implement a negative 10.1% update in payment rates for physician-related services in 2008. This formula compares the actual rate of growth in spending with a target rate based on such factors as the growth in the number of Medicare fee-for-service beneficiaries and statutory or regulatory changes in benefits. The actual percentage will vary by specialty, practice, and geography.

CMS claims its final physician payment rule is designed to improve the accuracy of Medicare payments and give physicians and health care professionals additional financial incentives to provide higher quality and value in the delivery of care.

The rule also lists 74 quality measures to be used in the Physicians Quality Reporting Initiative in 2008 (PQRI). It specifies that a $1.35 billion fund adopted last year will go to the PQRI. Under the PQRI, eligible professionals who report specific measures on quality of care furnished to Medicare beneficiaries may earn incentives of up to 1.5% of their total allowed charges, subject to a cap.

“Medicare needs to compensate physicians appropriately for the services they furnish to people with Medicare,” said Kerry Weems of CMS. “We believe the early work on the Physician Quality Reporting Initiative is one of those reforms that can help lead to better quality and more efficient care.”

Details of the final rule’s impact on urologists will be outlined by Ray Painter, MD, and Mark Painter in the December issue of Urology Times.