New bill offers Medicare physician pay formula fix

Lawmakers look for affordable ways to implement the Medicare Payment Advisory Commission recommendations.

By Markian Hawryluk, AMNews staff. March 25, 2002.

Washington -- New legislation has set a starting point for this year's efforts to fix Medicare's physician payment update formula. Proponents will now focus on ways to reduce the cost of the measure and find the money to pay for it.

Rep. Nancy Johnson (R, Conn.) introduced the Preserving Patient Access to Physicians Act of 2002 in early March. The bill would implement the recommendations of the Medicare Payment Advisory Commission.

Specifically, the bill would repeal the current formula, which relies on a spending target called the sustainable growth rate to update physician payments. Instead, Medicare reimbursement to physicians would be adjusted each year based on the estimated change in doctors' costs for the coming year, minus an adjustment for gains in productivity. The measure also would set the update for 2003 at 2.5%.

"I am committed to providing physicians with a more stable, predictable and fair payment formula," Johnson said in introducing the bill. "Absent such reform, we will shortchange our physicians and threaten both access to care and quality of care for our seniors."

The MedPAC proposal is expected to cost a hefty $126 billion over 10 years, a figure that the Bush administration and some congressional leaders have said would be too expensive. The price represents the difference between estimated spending under the bill's proposed formula and the projected outlays under the current formula. The Congressional Budget Office predicted that without changes to the formula, Medicare payments for physician services would be reduced 28% between 2002 and 2005. [...]