Medicare physician spending growth worries U.S. officials

The Centers for Medicare & Medicaid Services also releases its projection of a 4.6% Medicare pay cut for doctors in 2007.

By David Glendinning, AMNews staff. April 24, 2006.

Washington -- Although Medicare spending on physician services did not rise as much last year as it did the year before, the increase was still large enough to catch the attention of federal officials looking to find more efficiency in the system.

The Centers for Medicare & Medicaid Services recently estimated that spending on physician services increased by 8.5% during 2005. In 2004, this rate of growth was 11.4%.

But the nearly three percentage point drop was not due to patients using fewer or less complex Medicare services. Instead, the change is largely attributable to decreased growth in beneficiary enrollment, spending shifts stemming from the Medicare drug benefit and lower reimbursement for physician-administered drugs and lab tests, CMS said.

All but one percentage point of the 8.5% increase is due to physicians prescribing more services to their Medicare patients and more intensive levels of services. Physicians stepped up both the number and complexity of basic services, such as follow-up visits; minor procedures, such as physical therapy; and screening tests, such as imaging scans.

The 16% growth in imaging service expenditures alone, for example, was nearly twice as high as the average rise in spending for all physician services. Doctors' greater reliance on CT scans and MRIs is one of the biggest spending drivers in this area, the agency said.

Such developments worry those who are charged with making sure the program is paying for what it views as the right patient care.