Medicare pay squeeze: AMA calls for correction of update

Physicians look to Congress to minimize impact of a 5.4% Medicare pay cut next year.

By Markian Hawryluk, AMNews staff. Nov. 19, 2001.

Washington -- Hopes to avoid a 5% cut in Medicare payment for physician services are now pinned to the willingness of Congress to step in and minimize the reduction.

The Centers for Medicare & Medicaid Services announced Nov. 1 that the conversion factor used to calculate payments to physicians would decline by 5.4%. The impact on individual services, however, will vary due to changes in the relative value work units upon which payments for services are based.

The American Medical Association has called on Congress to act immediately to delay the 2002 update until permanent changes can be made to the underlying formula on which it is based. But with its plate full of national security and economic stimulus measures, it is unclear whether Congress will be able to address the payment issue before the cut is scheduled to take effect Jan. 1, 2002.

In the current environment, even noncontroversial regulatory reform measures that carry no federal costs are not considered a sure bet for passage. Therefore, a payment update fix that presumably would cost billions may not sit high on the agenda.

"Without congressional action now, the Medicare program will suffer a 5.4% cut, endangering access to quality patient care for our seniors," said Timothy T. Flaherty, MD, AMA chair. "Congress must act now to keep Medicare beneficiaries from suffering the same access problems that challenge Medicaid beneficiaries."

Unlike payments for hospitals or other providers for which Medicare's annual updates allow some government discretion, physician payment is updated based on a set formula. In essence, CMS must simply input the numbers and arrive at an answer. [...]