Doctors closer to Medicare pay relief

An administrative change adds new funding as the House passes a Medicare payment fix.

By Markian Hawryluk, AMNews staff. July 22, 2002.

Washington -- Physicians won't be too upset that Medicare officials don't think they're as productive as previously assumed.

By downgrading its estimate of physicians' ability to increase their income by being more productive, the Centers for Medicare & Medicaid Services has proposed restoring more than $1 billion in physician Medicare payments through 2005.

The change was announced just as the House of Representative voted 221-208 to adopt a Medicare reform package that included a prescription drug benefit and a three-year fix of the physician payment update formula. The measure would eliminate deep cuts in Medicare payment rates, setting the update at about 2% for each of the next three years.

The American Medical Association lauded both moves but cautioned that neither represented a full solution to the growing Medicare access problem. The House vote must be followed by Senate action for the payment fix to move forward. And the administrative change in the productivity factor would not be sufficient to avoid a second consecutive year of cuts in physician payment.

In the proposed rule on the physician fee schedule, CMS recommended changing the productivity adjustment factor used to calculate the Medicare Economic Index. The MEI is used to approximate the inflation of the cost of physician supplies and services and is a key portion of the sustainable growth rate formula that influences Medicare's physician payment rates.

The move would change the current estimate of the 2003 pay update from a 5.1% cut to a 4.4% cut. CMS will revise that estimate in November as actual data become available. [...]