GOVERNMENT

Battle begins in Congress over Medicare pay cut

Lawmakers debate the necessity and expense of overhauling Medicare's physician payment formula.

By David Glendinning, AMNews staff. Feb. 28, 2005.

Washington -- The race to fix the Medicare physician pay system this year is on. But while some lawmakers already have started getting into the details of how they can accomplish such a move, others are questioning whether they need to act at all.

The House Ways and Means health subcommittee recently held its first hearing on the subject this congressional session, and the voices calling for payment reform were out in force. Physicians representing the American Medical Association and various specialty groups warned that the projected 5.2% cut in Medicare reimbursements next year -- as well as similar estimated cuts in subsequent years -- would have a devastating effect on patient access to care.

"The Medicare payment formula as it relates to physicians is flawed and permanently broken," said Nancy H. Nielsen, MD, PhD, speaker of the AMA House of Delegates.

The AMA says payment is disconnected from the actual costs of physician services because the formula establishes a spending target for each year that is based largely on how well the national economy is doing, rather than on medical inflation. When doctors as a whole exceed the sustainable growth rate target, base reimbursements for subsequent years are cut.

The Association wants Congress to replace the SGR formula with a system that reflects increases in doctors' practice costs.

That position received a sympathetic reception from Rep. Nancy Johnson (R, Conn.), the subcommittee's chair.

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