Medicare crisis avoided, but hard work ahead

Congress prevented a 5% cut in physician reimbursement for this year. Now it must pass permanent payment reform.

Editorial. Jan. 22, 2007.

The physician community breathed a collective sigh of relief in December 2006 when Congress, just before adjourning, passed legislation that averted a 5% cut to the 2007 Medicare conversion factor. Instead, this year's factor, which turns the value Medicare places on services into dollar amounts, will remain at 2006 levels.

Now doctors have to inhale deeply and prepare for a new fight to prevent not only a reduction in 2008, but consecutive cuts until 2015.

As the American Medical Association noted after the vote, the legislation provides only a temporary reprieve for doctors and Medicare patients. The AMA was instrumental in averting the 2007 cuts and praised lawmakers from both sides of the aisle for working together to make the stay happen.

The Association has been pushing for years for a long-term solution to Medicare's reimbursement problems. This year, it will continue the drive for permanent payment reform for the sake of doctors and the patients who rely on them.

The stakes are high for both. Physicians, although helped by the continuation of 2006 rates, still come out behind financially this year when increases in practices costs are taken into account.

In addition, because of the way Congress financed the payment legislation, doctors face a 2008 cut of as much as 10%, according to the Congressional Budget Office.

To make matters worse, under the flawed Medicare reimbursement formula, physicians' payment would drop about 40% over the next eight years. During that time, the cost of running their practices would increase about 20%.