Time running out to fix Medicare pay

Without legislative action, physician Medicare reimbursement would be cut 5.1% next year and about 40% over the next nine years.

Editorial. Sept. 11, 2006.

If ever time was of the essence to fix the broken Medicare physician payment formula, it is now -- before lawmakers go back to their states and districts in October to campaign for re-election.

The latest news is grim. Physician reimbursement would fall on average 5.1% next year unless lawmakers act. And that's just the beginning. Without congressional intervention, doctors' Medicare pay will be slashed about 40% over the next nine years, while practice costs increase about 20%.

The problem is, and has been for years, the hopelessly flawed Medicare physician payment formula. The calculation punishes physicians with lower payments when increases in spending for their services exceeds growth in the gross domestic product. But growth in medical care is influenced by factors other than GDP -- growing patient health needs, new technology to more accurately diagnose patient illness, and expanded Medicare coverage that encourages patients to seek more care.

That's why the American Medical Association is calling for an overhaul of the formula. The Association's proposal is nothing more than common sense: Keep physician payment increases in line with growth in the cost of caring for Medicare beneficiaries.

Physicians aren't the only ones calling for change. The Medicare Payment Advisory Commission, which advises Congress on physician reimbursement, has said the payment system should be scrapped. The panel recommends that instead of using a formula, the government should base yearly physician payment updates on an analysis of payment adequacy.