Annual Medicare trustees report issues dire forecast for Part B

The problem needs a comprehensive, long-term solution that includes a stable payment system for physicians, the AMA says.

By David Glendinning, AMNews staff. May 14, 2007.

Washington -- Spending on Medicare outpatient services will grow at an alarming rate in the coming years -- a financial picture that would worsen if Congress acts to prevent several years of predicted physician reimbursement reductions, according to a new report from Medicare trustees.

Allowing the payment cuts to stand, however, is not an answer, said AMA Board of Trustees Chair Cecil B. Wilson, MD.

"Lawmakers must stop looming Medicare physician payment cuts to ensure seniors have access to care in the short term and start working toward innovative long-term reforms for the entire program," he said.

Under current law, Part B spending will increase by a projected average of 6.6% annually over the next decade, in large part due to increased utilization of physician services, the annual report from the program's caretakers predicts. This means that Medicare expenditure growth will outpace the U.S. economy as a whole, which is expected to grow an average of 4.8% per year in the same period.

But this outlook assumes that Medicare will slash physician reimbursements across the board by nearly 10% in 2008 and by about 5% per year for most of the next decade. The trustees expect Congress to step in long before this happens.

"More than nine years of significant reductions in physician payments per service are very unlikely to occur before legislative changes intervene," they said in their report, released April 23.

If lawmakers continue to override scheduled physician cuts, as they have every year since 2003, spending on doctors' services and other Part B benefits will follow a more worrisome upward trend. Instead of an average annual increase of 6.6%, the figure could be as high as 9%. This would be nearly double the growth of the economy and would put a much greater strain on taxpayers and beneficiaries, the trustees said.