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OSD Staff
Publish Date: June 9, 2008   |  Tags:   News
Congress Considers Physician Rate Cuts
If your affiliated surgeons seem a little out of sorts this holiday season, it might have to do with a proposed, across-the-board 5.4 percent cut in 2002 Medicare payments to all physicians.

The American Medical Association and other physician groups have waged an intense battle to halt the cuts. Bills were introduced in both the Senate and House of Representatives, but at press time, neither had been voted on.

"We realize that getting this legislation passed before Congress goes home for the year will be an uphill battle," said Catherine Cohen, a lobbyist for the American Academy of Ophthalmology (AAO).

"Congress's attention is on fighting terrorism and rejuvenating the slowing economy. We in medicine will have to work extra hard to ensure that our voice is heard above the other buzz."

Late last fall, CMS published the 2002 fee schedule, which includes a $36.20 conversion factor based on a complex formula and, physicians say, erroneous data. The conversion factor is the figure used to translate the payments for Medicare services into dollar values.

Physicians responded with intense Congressional lobbying. Just days after CMS published the proposed cuts, the American College of Surgeons reported that more than 500 Fellows had already e-mailed their Congressional representatives via the ACS website.

"The update is based on poor policy, and Congress needs to fix it," said the AAO's William Rich, MD. "We are calling on key contacts with Congressional health leadership to consider proposals to at least limit the cut or freeze the update until Congress can act next year. As far as we're concerned, this fight is not over. Physicians are being needlessly penalized, after enduring cuts for ten years."

Physician groups contend that:
  • medicare payments to physicians were cut four times during the 1990s;
  • despite recent positive updates for physicians, the average increase over the last 10 years has been only 1.7 percent-less than the cost of inflation experienced in medical practices;
  • the current formula is using flawed data that results in cumulative reduction in the base pay for physician services;
  • physicians are the only providers under the Medicare program whose update is tied to the gross domestic product-although a decline in the economy does not reduce patient load or costs.


The Senate bill, introduced on Nov. 8 by Sens. Jim Jeffords (I-VT) and John Breaux (D-LA) is called the Medicare Physician Payment Fairness Act of 2001. This legislation would significantly reduce the 2002 cut from 5.4 percent to 0.9 percent. The bill requires the Medicare Payment Advisory Commission (MedPAC) to recommend a different (physicians say "more fair") way to determine the physician payment update by March 1, 2002. On November 28, Reps. Mike Bilirakis (R-FL), Sherrod Brown (D-OH), Billy Tauzin (R-FL), and John Dingell (D-MI) introduced the House version of the bill.

"Bipartisan support for this legislation in the House and Senate reinforces the critical nature of halting the 5.4 percent cut," Dr. Rich said. "These reductions would unfairly penalize physicians, hampering their ability to provide high quality services to America's senior citizens. As the cost of delivering health care increases, decreased payments to physicians could lead ultimately to reduced benefits to older Americans."

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