MEDPAC Offers Quick Fix for Medicare Physician Payment Cut

Edition: March 2002 - Vol 10 Number 03
Article#: 1177
Author: Repertoire

The 5.4 percent Medicare physician payment cut that went into effect January 1 is proving to be a major bone for many doctors to contend with. Physicians may be experiencing the largest payment cut since the Medicare fee schedule was initiated about 10 years ago, according to the American Medical Association.

This, in combination with average compensation increases as low as 1.1 percent for some since 1991, could force physicians to lay off staff members and close their doors to new Medicare patients. In addition, more physicians may opt for early retirement or limit their participation in the Medicare program. The consequences could be especially detrimental to the quality of care in rural communities, according to the AMA.

The Medicare Payment Advisory Committee (MEDPAC) pushed first for a softer Medicare payment reduction, and now for a revised system linking the annual Medicare physician payment update to predicted fluctuations in physician costs, with an adjustment for productivity gains, according to American Medical News (February 4, 2002). As a result, MEDPAC is hopeful that physicians will see a 2.5 percent increase in pay for 2003.

Retroactive Fix is Difficult
The Committee still wants to see a reversal of the 5.4 percent physician payment reduction. Robert Doherty, senior vice president of the American College of Physicians-American Society of Internal Medicine, was quoted as saying that a retroactive change would require much effort. For one, Medicare carriers would have to notify physicians of a fee schedule change. The Centers for Medicare and Medicaid Services might have to reopen the sign-up for physicians to participate in the program. And, given that some Medicare contractors already have begun paying physician claims, cases would have to be reprocessed and repaid (American Medical News, February 4, 2002).

Still, says Doherty, anything is possible. He anticipates an influx of calls from frustrated physicians to their congress people, inquiring about the pay reduction.

The AMA is not planning on backing down in its fight to reverse the payment cut. But, notes Elizabeth Fowler, majority staff member, Senate Finance Committee, its efforts in part largely depend on whether physician lobbies show up in big numbers.