Doctors get a 1.5% pay hike as Congress passes Medicare reform

Other provisions boost payment to rural physicians and grant regulatory relief.

By Markian Hawryluk, AMNews staff. Dec. 8, 2003.

Washington -- After months of at times rancorous congressional debate over prescription drugs and competition in Medicare, physicians have finally secured much of the pay and regulatory relief they were seeking.

By thin margins, both the House and Senate passed a monumental Medicare reform and prescription drug package that replaces deep cuts in Medicare payment to physicians with increases of at least 1.5% in 2004 and 2005. It also raises reimbursement to physicians in rural and underserved areas.

The House vote was 220-215; the Senate vote was 54-44.

"There are so many positive provisions in this bill," said AMA President Donald J. Palmisano, MD. "All Medicare patients will be eligible for a long-overdue prescription drug benefit, and the neediest patients will receive the most assistance. This truly significant legislation also enhances access to care for seniors by halting Medicare cuts to physicians and other health professionals for the next two years."

Doctors were scheduled for a 4.5% cut in 2004 due to a complex update formula that ties annual increases in payment to the gross domestic product. Although the legislation attempts to smooth out the volatility of payment updates by moving to a 10-year average of gross domestic product rather than a one-year figure, physicians are likely to face a deep cut in 2006 unless Congress permanently changes the formula.

Physicians in rural areas who were pursuing greater equity in Medicare payments saw a partial victory in the bill. The measure will eliminate, in 2004 through 2006, cuts in payment resulting from geographic adjustments to the work portion of physician payments. This will bring all areas of the country to at least the national average, without lowering payments to doctors paid above the average. The bill will not affect geographic adjusters for practice expense or liability premium portions of physician fees.