Legal opinion argues for changes to pay update formula

Former government official says CMS can act to lessen impact of Medicare payment cuts on physicians.

By Markian Hawryluk, amednews staff. May 27, 2002.

Washington -- A coalition of physician groups has new evidence it says shows the Bush administration can and should correct past errors in the Medicare physician payment update formula. Such a move could increase physician payments over the next 10 years by $62 billion.

Earlier this month the coalition, which includes the American Medical Association, released a legal opinion by Terry Coleman, who served as chief counsel of the Health Care Financing Administration during the Reagan administration and deputy administrator during the first Bush administration. He concluded that the current administration has the legal authority to make the changes requested by physician groups.

The issue stems from the use of estimates to determine Medicare physician spending targets for 1998 and 1999. Those estimates missed the mark, and because physician payment updates are cumulative, the errors continue to cost physician practices.

Correcting these mistakes would add about $46 billion to physician payments over the next decade and would make passing modifications to the formula in Congress that much more affordable. House Ways and Means Committee Chair Bill Thomas (R, Calif.) and health subcommittee Chair Nancy Johnson (R, Conn.) have urged the administration to make those changes. [...]

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