Senate unveils proposal for Medicare pay fix, regulatory reform

Legislation would begin to shrink the gap between rural and urban Medicare payments.

By Markian Hawryluk, AMNews staff. Oct. 14, 2002.

Washington -- The size and shape of Medicare physician payment relief has become a little clearer, even if the chances of final passage remain murky.

A package constructed by Senate Finance Committee Chair Max Baucus (D, Mont.) and ranking member Charles Grassley (R, Iowa) includes the House-passed payment fix. It would set annual physician updates at about 2% from 2003 through 2005 but would require further congressional action to avoid a catastrophic drop in payments in 2006.

Without legislative action, physicians face an estimated 4.4% Medicare pay cut in 2003 and a 15% reduction over the next three years.

Reflecting the predominately rural makeup of the committee, the legislation also includes measures to reduce Medicare payment disparity between geographic regions. While there has been little controversy over regional differences in the practice cost and professional liability insurance components of the physician fee schedule, rural doctors have been irked over lower values for the work component of their payment.

The Senate proposal would bring all physicians up to at least the national average for the work component from 2003 to 2005 without cutting rates in higher payment areas. The provision is expected to add about $1 billion in Medicare spending for physician services during the three years.

Additionally, the bill would require the Centers for Medicare & Medicaid Services to determine when a physician practicing in an underserved area is due a bonus payment. While the added funds are available to physicians under current law, many are unaware that they qualify, and the bonuses go unclaimed. [...]