HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Tuesday, November 13, 2007

Potential 10.1% Reduction in Physician Fee Schedules

AMNews reports on the potential for large cuts in physician fee schedules under Medicare.  It reports,

The Centers for Medicare & Medicaid Services final 2008 Medicare physician fee schedule rule institutes an average 10.1% pay cut effective Jan. 1, 2008, although the percentage will vary by specialty, practice and geography.

The rule also lists the 74 quality measures to be used in the Physicians Quality Reporting Initiative in 2008. It specifies that a $1.35 billion fund adopted last year will go to the PQRI and not toward easing physician pay cuts. The regulation also delays finalizing most of the latest revised physician self-referral, or "Stark," rules.

Medical organizations called the 10.1% reduction unacceptable.

"Congress must step in to replace the cut with payment increases that keep up with medical practice costs," said American Medical Association Board of Trustees Chair Edward L. Langston, MD. "Next year's 10.1% physician payment cut is bad news for America's seniors as 60% of physicians say the cut will force them to limit the number of new Medicare patients they can treat." . . .

Lawmakers continue to work on legislation to prevent next year's cut.

In the House, an Energy and Commerce Committee staff member said leaders are sticking with the Medicare physician pay provisions adopted as part of its State Children's Health Insurance Program reauthorization bill in early August. The measure would have increased reimbursement 0.5% in 2008 and 2009 each.

Cuts to Medicare Advantage health plans' payment would have largely funded the boost. Specifically, these cuts would have lowered Medicare's regional benchmark payments to insurance companies, ended a stabilization fund used to share risks with insurance companies and eliminated indirect medical education payments to teaching hospitals.

These changes would reduce enrollment by more than half of the projected 12.5 million enrollees in 2012, according to an Oct. 10 Congressional Budget Office analysis. Today 8.2 million people are in these health plans.  But the provisions were removed in the House-Senate compromise SCHIP bill in an attempt to maintain a veto-proof Senate majority. Many Senate Republicans oppose cutting private health plan payments.

Still, Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee, would prefer to adopt a two-year payment fix by shifting some Medicare Advantage payments to fund physician reimbursement, said panel spokeswoman Carol Guthrie. But Republican members' support of such a measure was not clear at press time.

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