House, Senate measures propose 2.7% increase in Medicare pay

Physicians are buoyed by the hope of a fix to the current payment formula, which otherwise would impose a 4.3% reduction in reimbursement next year.

By Joel B. Finkelstein, AMNews staff. June 6, 2005.

Washington -- The initial shots in the fight to prevent Medicare physician payment cuts have been fired in Congress with the introduction of two bills to adjust the reimbursement formula.

The measures, one that would replace the current system permanently and the other that offers a more temporary solution, have doctors optimistic that lawmakers will act soon to ensure that reimbursement remains at levels that allow them to sustain current participation in the program.

"We would love to have a permanent fix," said J. James Rohack, MD, American Medical Association chair. "But it's clear that if neither bill passes, there will be a real problem with physicians having to make decisions of whether to accept new patients."

Under current law, the Centers for Medicare & Medicaid Services is required to adjust payment to physicians based on what doctors see as a flawed formula that ties reimbursement changes to the gross domestic product. Under that methodology, physician payment would be cut an estimated 4.3% next year.

Similar reductions to physician reimbursement have been averted over the past several years by congressional action. Most recently, the Medicare Modernization Act of 2003 replaced cuts with increases of 1.5% for 2004 and 2005. But Congress did not come up with a permanent solution.

The House legislation, sponsored by Reps. Clay Shaw (R, Fla.) and Ben Cardin (D, Md.), aims to change that situation. It would set next year's update at 2.7%. Then, starting in 2007, it would replace the current formula with one linked to the rising cost of providing care.