CMS won't tap reserve fund to ease Medicare physician pay cuts; money marked for reporting bonuses

The decision goes against the advice of the American Medical Association and 85 other physician and health professional organizations.

By David Glendinning, AMNews staff. July 23/30, 2007.

Washington -- Physicians would miss out on the chance to see their Medicare payment cuts shaved by two percentage points next year under a Bush administration proposal that opts against using a special reserve fund to lessen the reimbursement hit.

The proposed Medicare payment rule issued July 2 by the Centers for Medicare & Medicaid Services projects that next year's across-the-board physician cut will be 9.9%, the same as the previous estimate. The rule also announced for the first time that a $1.35 billion reserve fund Congress set aside last year to address physician payment and quality of care will not go toward decreasing that percentage.

"We believe it is essential that Medicare continue to encourage improvement in the efficiency and quality of health care delivered to Medicare beneficiaries," CMS states in the rule. "Therefore, we are proposing that the $1.35 billion be used to fund bonus payments to be made during 2009 for physician reporting of measures during 2008."

So instead of reducing the 9.9% cut to about 7.9% for all physicians, CMS will use the additional money to pay an estimated bonus of less than 2% to doctors who participate in the Physician Quality Reporting Initiative when the agency renews it next year. The PQRI launched July 1, and its initial phase runs for the last six months of 2007. Physicians who are participating this year are eligible for a 1.5% bonus -- payable in the middle of 2008 -- on all of their Medicare claims during that 2007 time period.