1.5% Medicare increase secured, but future pay cuts are forecast

Reimbursement changes for cancer drugs may cause oncologists to stop administering chemotherapy in their offices.

By Joel B. Finkelstein, AMNews staff. Aug. 16, 2004.

Washington -- Medicare officials gave doctors a dose of good news in the proposed 2005 payment rule. But the regulation includes a shot of bad news, too.

While an increase in physician payments and new preventive services came as welcome announcements, some specialty societies voiced concerns over a steep drop in reimbursement for injectable drugs covered under Part B of the program.

The proposed rule, issued by the Centers for Medicare & Medicaid Services late last month, includes the 1.5% increase in the 2005 physician fee schedule mandated in last year's Medicare reform law.

"Efforts by Congress and the Bush administration prevented an access-to-care crisis for patients this year and next by halting a 4.5% cut in Medicare payments this year and a 3.7% cut in 2005," said J. James Rohack, MD, chair of the AMA Board of Trustees.

"The narrowly averted 2004 and 2005 cuts -- and the upcoming cuts forecast for 2006 through 2012 -- are an alarm bell for America's Medicare patients and their physicians that the flawed payment formula must be replaced," said Dr. Rohack.

Those impending cuts of 5% each year are due to the sustainable growth rate formula contained in the Balanced Budget Act of 1997 and designed to limit growth in Medicare spending on physician services. The AMA is seeking legislation that would permanently rewrite the formula.

In addition to the 1.5% increase in physician payments, the proposed rule includes a 5% bonus for primary care physicians and specialists working in underserved areas of the country.