Medicare payment outlook is dismal

Scarce dollars mean that a boost for rural doctors would hurt other physicians, and relief from next year's expected pay cut will be tough to get.

By Markian Hawryluk, AMNews staff. June 2/9, 2003.

Washington -- Congressional debate over Medicare payment policy in the next months will force physicians to face the cold, harsh reality of life in tight budgetary times.

With limited resources and a long list of funding needs, lawmakers will have to choose between competing interests. Their options pit physicians against physicians, and physicians against their patients, in the fight for health care dollars.

The opening salvo of the debate came as an amendment by Sen. Charles Grassley (R, Iowa) to the tax bill passed by the Senate in mid-May. The measure would provide more funds for rural health care, including limits on the geographic disparities in Medicare physician payments. But the boon for rural doctors could come at the expense of other physicians.

Medicare adjusts physician fees for local variations in labor, practice and liability insurance costs. That means many rural physicians have been paid less for the same services than their counterparts in higher cost, urban areas.

The Grassley amendment would eliminate any reductions that occur as a result of the geographic adjusters. That would bring all physicians at least to the national average without lowering payments to physicians in higher-cost areas.

"This legislation goes a long way to fixing the shortcomings in Medicare that shortchange Iowa and other rural states," Grassley said.

To pay for the adjustments, Grassley proposed cutting Medicare payments for physician-administered outpatient drugs, adding a beneficiary co-payment for clinical lab services and freezing payments for durable medical equipment.