Medicare physician payment reductions announced

March 1, 2003

Pharmaceutical Representative

CMS announced the final rule updating physician payment rates under Medicare.

The Centers for Medicare & Medicaid Services announced the final rule updating physician payment rates under Medicare. The rule will cut fees to physicians by 4.4% beginning March 1, 2003, although total physician spending will increase by 2% in 2003.

"In the rule we are announcing today, CMS has done everything it can to shore up physician payments for 2003, but only Congress has the authority to fix the formula," said CMS Administrator Tom Scully. "CMS refined the methodology for calculating the rate of inflation in providing physicians' services by adjusting the measure of productivity." As a result, physicians will see a reduction of 4.4%, rather than the 5.1% reduction that would have occurred without the change.

The Centers for Medicare & Medicaid Services is expanding its efforts to monitor beneficiary access to physician services, both nationally and in local healthcare markets, as it expects the reduced rates to cause fewer physicians to accept Medicare rates as full payment, and also to cause fewer physicians to accept new Medicare patients.

Almost 90% of physicians accept Medicare assignment today, and as yet, CMS has not seen access problems. However, CMS expects that may change after these rates take effect.

"The administration has been, and continues to be, anxious to work with Congress to fix the flaws in the formula – as soon as possible," said Scully.

Fixing the flaw

The Chicago-based American Medical Association is also urging Congress to fix the flaws in the calculations used to figure physician payments. "What's startling is that these cuts are all due to a government mistake in calculations - a mistake that should have been corrected long ago," said Yank D. Coble Jr., president of the AMA. "With the next round of cuts imminent on March 1, Congress has just a tiny window of opportunity to stop the looming crisis."

Bill Thomas (R-CA), chairman of the Ways and Means Committee, has taken advantage of this window by introducing legislation that would freeze physician payment rates at their 2002 level for one year by nullifying the physician payment rule.

Said Thomas, "It is critical that we modernize Medicare so that reimbursements more accurately reflect the market. One of the biggest problems is that physicians face significant and successive payment cuts that could harm patients' access to care." PR

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