Congress may sweeten Medicare pay

The House bill would replace next year's payment cut with a 1.5% increase.

By Markian Hawryluk, AMNews staff. June 30, 2003.

Washington -- A pair of Medicare reform bills speeding their way through Congress offer new hope for physician payment relief.

Physician payments would increase by at least 1.5% in both 2004 and 2005 under the Medicare legislation released earlier this month by House Ways and Means Committee Chair Bill Thomas (R, Calif.) and Energy and Commerce Committee Chair Billy Tauzin (R, La.). Meanwhile, the bipartisan Senate bill would eliminate the payment disparity for rural physicians.

Despite the expectation that lawmakers will try to amend the bills, pundits say they are all but guaranteed to pass. That means the fate of both physician pay provisions likely will be hashed out by a small group of lawmakers charged with fusing the two measures into a single bill.

By setting physician updates for the next two years at no less than 1.5%, the House legislation would eliminate a 4.2% cut slated to go into effect in January. Calculations of future updates would return to the formula based on the sustainable growth rate, a yearly target designed to allow physician payments to grow more or less at the same rate as the gross domestic product. If payments in a given year exceed that target, future payments to physicians must be cut to make up the difference.

Over the years, the formula has resulted in sharp annual increases and decreases in Medicare physician payment rates, including a 5.4% cut in 2002. The House bill would seek to smooth the saw-tooth pattern of updates by using a 10-year rolling average of GDP.