GOVERNMENT & MEDICINE

MedPAC recommends 2.5% pay increase for next year

The advisory commission's recommendation requires congressional action to avert a projected Medicare pay cut for physicians in 2004.

By Geri Aston, AMNews staff. March 17, 2003.

Washington -- Physicians deserve another pay increase next year, not the cut that is coming their way if the payment formula is followed, according to a key congressional advisory committee.

In its March report, the Medicare Payment Advisory Commission formally recommended to Congress that physician payment rise 2.5% in 2004. The group arrived at the number by estimating inflation in doctors' costs, such as their time and effort, liability insurance premiums, and practice expenses, and then adjusting the figure for physician productivity.

But the Bush administration has warned doctors that under the formula, their pay would be cut next year by an as-yet-undetermined amount.

A 2004 reimbursement cut could heighten concerns about beneficiaries' access to physicians that were sparked by a 5.4% reduction in 2002 and a narrowly averted 4.4% cut this year.

A survey conducted on MedPAC's behalf indicated that the number of physicians accepting all new Medicare fee-for-service patients dropped from 76% in 1999 to 70% in 2002.

Congress and the Bush administration acted not only to avoid a cut in 2003, but also to provide the 1.6% physician payment increase that went into effect March 1. Whether that move was enough to assuage physicians' concerns and avoid beneficiary access problems has not yet been determined. And the effect a cut next year would have is also unclear.

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