Feds say Medicare pay freeze could double the cut for doctors next year

Some physician advocates hope the large cost of another one-year change will spur lawmakers to pursue a longer-term solution to the reimbursement problem.

By David Glendinning, AMNews staff. Jan. 22, 2007.

Washington -- The ink was barely dry on the law that prevented a 2007 Medicare physician fee reduction when the office that makes official cost predictions for Congress projected a 2008 cut that will be even more difficult to reverse.

Medicare pay to physicians will be reduced about 10% next year if current law remains unchanged, the Congressional Budget Office said Dec. 28, 2006, in its final cost assessment of the legislation that averted a 5% cut this year. So unless Congress overhauls the system that determines reimbursements or approves another short-term adjustment, next year's cut is expected to be roughly twice what doctors faced before lawmakers intervened in December.

The reason this would happen is that the measure kept this year's rates at 2006 levels but did not build the change permanently into the payment system. This made the reversal of the 2007 physician reimbursement cut billions cheaper for Congress.

But it means that when 2008 rolls around, the payment system will act as if the one-year fix had never occurred. This necessitates a reduction roughly two times as large to get reimbursements back to the level defined by the Medicare formula.

A doubly large projected reduction means that physicians' job of preventing further cuts becomes doubly difficult this year, some congressional aides and lobbyists said.

"That's the problem with [lawmakers] trying to mitigate the budgetary effects of this change," said Randy Fenninger, the Washington representative for the American Assn. of Clinical Endocrinologists. "You just put off one more year what ultimately has to be the day of reckoning."