Senate ponders payment fix

New legislation would minimize the scheduled cut in Medicare physician payment.

By Markian Hawryluk, amednews staff. Nov. 26, 2001.

Washington -- Sens. Jim Jeffords (I, Vt.) and John Breaux (D, La.) have provided the means by which Congress could soften the blow of a scheduled 5.4% cut in Medicare physician payment but have left supporters scrambling to find a way to bring the measure to a vote before the end of the year.

The Medicare Physician Payment Fairness Act of 2001, introduced by Jeffords Nov. 9, would limit the cut in the average per-procedure Medicare payment to 0.9%. It also would require the Medicare Payment Advisory Commission to report on replacing the update formula by March 1, 2002. MedPAC has recommended that Congress scrap the current formula and already has been working on alternate concepts for updating physician payments each year.

Even without the Jeffords bill, MedPAC is expected to address replacement of the update formula in its March report. That may provide a long-term solution but would not stop the reduction scheduled to go into effect on Jan. 1, 2002.

The AMA has expressed its strong support for the Jeffords bill. "This legislation is urgently needed to prevent a 5.4% Medicare payment cut from becoming effective Jan. 1, 2002," said AMA Board Chair Timothy T. Flaherty, MD. "It would also allow Congress, in conjunction with MedPAC, to reconsider the flawed physician payment update formula that has resulted in such sharp Medicare payment reductions."

The prognosis

But the greatest hurdle facing the bill may be getting it to the Senate floor for a vote. At press time, the Senate Finance Committee, which deals with Medicare issues, did not have plans to consider the proposal.

The bill's best shot may be as an amendment to another measure, possibly the economic stimulus package. President Bush has called on Congress to pass a stimulus plan by the end of November, but it has been the subject of acrimonious debate in both houses of Congress. The amendment could be added during Senate debate or during the conference between House and Senate representatives to merge their respective versions of the package into a single measure.

In its first week, the legislation was gaining support. Sens. John Kyl (R, Ariz.), John Kerry (D, Mass.) and Jeff Bingaman (D, N.M.) are co-sponsors. Hopes for a companion House bill rest on Energy & Commerce Chair Billy Tauzin (R, La.) and Rep. Sherrod Brown (D, Ohio). Brown has raised the physician payment issue at several panel hearings and a spokesman indicated that the congressman was "seriously considering" offering a bill and exploring potential co-sponsors.

Another hurdle will be the bill's price tag. Before an official estimate from the Congressional Budget Office, it was unclear how much the bill would cost. But a change in the update as large as that proposed by Jeffords would cost billions, and Congress must find a way to offset that spending under its pay-as-you-go procedures.

Doctors face a similar problem. They must offset rising costs while facing a Medicare reimbursement cut.

A Medical Group Management Assn. survey of multispecialty medical groups in 2000 said operating costs for medical practices had risen 6.2% in that year, fueled by a 9% jump in medical and surgical supplies costs.

William Hall, MD, president of the American College of Physicians--American Society of Internal Medicine, said physicians have little recourse left. As a result, many have opted to retire early or leave medical practice altogether, he said.

"They've already tried increasing their patient load, decreasing their staff and putting off buying new medical equipment," Dr. Hall said. "There is simply nothing left to cut for many of these doctors."