Last-minute Medicare pay package freezes rates, adds reporting bonus

Organized medicine prevails on a Medicare stopgap measure but renews calls for system overhaul as the price tag increases for a 2008 fix.

By David Glendinning, AMNews staff. Dec. 25, 2006.

Washington -- In one of its final acts, the 109th Congress froze Medicare physician payments at 2006 levels, laid the groundwork for a pay-for-performance system and set aside money to fund future reimbursement changes.

Hitching a ride on a massive package of health, tax and trade legislation, the freeze stops the 5% across-the-board cut set to start Jan. 1, 2007. At press time, President Bush had not yet signed the bill into law but was planning to do so.

The latest congressional intervention on this issue marks another last-minute reprieve for doctors, many of whom said they would stop accepting new Medicare patients if reimbursement continued to decline. The American Medical Association led the charge on the stopgap legislation.

"Congressional action to avert next year's 5% Medicare physician payment cut will help avert a potential sharp decline in access for America's seniors," said AMA Board of Trustees Chair Cecil B. Wilson, MD.

"The AMA sincerely appreciates the bipartisan efforts by House and Senate leaders, committee chairmen, ranking minority members and congressional staff to prevent the Medicare cut triggered by the flawed Medicare physician payment formula," Dr. Wilson said.

With the Bush administration's implementation of a broad set of changes in the way that Medicare values certain physician services, reimbursement rates for some types of doctors actually will go up in 2007 despite the rate freeze. Other specialties will see an overall reduction in rates. But Medicare officials still expect total program spending on physicians to rise significantly as the volume of services they provide goes up.