Medicare forecast of 4.7% pay cut renews calls for pay reform

The CMS chief says the payment system must be fixed, but the price could be quality-based reimbursement and cuts to nonphysicians.

By David Glendinning, amednews staff. May 22/29, 2006.

Washington -- Another ominous annual report from Medicare's caretakers early this month intensified the distress over upcoming cuts to physicians and the ever-rising costs of fixing the problem.

The Medicare Trustees Report projects a 4.7% reduction in physician reimbursements in 2007 and 37% in cumulative cuts over the next nine years. Unless Congress steps in, each year in the next decade or more will feature a roughly 5% cut in doctors' pay while the costs to physicians of providing care increase by more than 2%. Spending on the Part B side of the program, meanwhile, continues to rise at alarming levels and puts growing strain on beneficiary and government pocketbooks, the trustees said.

"Today's report on the dire future of Medicare cries out for reforms to ensure that Medicare will be there for future generations," said American Medical Association Chair Duane Cady, MD. "Congress must take an immediate step to preserve seniors' access to physicians by tying Medicare physician payments to the cost of caring for seniors."

The gloomy outlook from the program's trustees, who also predicted that the hospital side of Medicare would go bankrupt in 2018, prompted a call to action as well from Health and Human Services Dept. Secretary Michael Leavitt. "The message of this report is urgency," he said. "I do not want to stand here another year with just another bad report and another year of inaction."

But while physicians, federal officials and lawmakers agree that a long-term solution is vital, the recurring problem of how to fund such an intervention is prompting continuing debate. Policy-makers exhibit signs that Congress' usual route of approving last-minute, temporary rate increases to doctors is proving increasingly less palatable to many.

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The AMA's House of Delegates is holding its Interim Meeting Nov. 7-10 in Houston, addressing issues such as health system reform and physician payment.
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