Drive to fix physician pay formula revs up

Fluctuations in payment updates have some lawmakers ready to scrap Medicare's target physician spending rate.

By Markian Hawryluk, AMNews staff. Nov. 5, 2001.

Washington -- Big swings in the physician payment update in recent years have resulted in calls on Capitol Hill to replace a major component of the system used to set Medicare reimbursement for doctors. At the same time, physicians are working to ensure they don't face a pay cut next year.

The AMA says the formula still relies on flawed data and is urging Congress to delay implementation of the update until the formula can be fixed.

The AMA has been working for months with the Centers for Medicare & Medicaid Services in an attempt to address the problems, but CMS considers itself bound to the flawed estimates by law, said D. Ted Lewers, MD, immediate past chair of the AMA Board of Trustees.

"We've got to correct the formula," he said. "We think the best thing to do at this point is for Congress to delay the 2002 update until we can get permanent changes in the formula."

Without legislative action, it appears physicians would face their fourth cut in pay in the last 10 years.

The Medicare Payment Advisory Commission estimated the physician payment update for 2002 at -4.5%, but stressed that the official announcement from CMS could differ from the panel's prediction. But it is unlikely that the official update would differ enough to reach a break-even level.

The latest estimate "seeks to reinforce the commission's early position that the sustainable growth rate should be replaced," said MedPAC staff member Kevin Hayes. The SGR is a target for Medicare physician spending. If actual physician spending falls below the target, the government increases the following year's payment update, but if spending exceeds the target, the physician payment update is lowered the next year. [...]