The backlash of deferring a 5 percent cut to physicians' 2007 Medicare reimbursements was felt for the first time Monday, as the Centers for Medicare & Medicaid Services proposed a 10 percent cut in physician reimbursement for 2008.
CMS proposed the payment reductions to comply with the sustainable growth rate formula, a methodology for determining Medicare rates that stipulates that incremental cuts to provider reimbursements are to occur in the absence of a Medicare surplus. When Congress defers SGR-mandated cuts, as was the case in December, the law implementing SGR requires that deferred cuts be applied in the following year.
In February, the Congressional Budget Office warned that physician reimbursements from Medicare could be slashed by 10 percent in 2008. SGR cuts could reach 25 percent to 35 percent over the next few years, CBO predicted.
Advocacy groups such as the American Medical Association have gone on the offensive against anticipated reimbursement reductions. At the group's annual meeting in Chicago last week, AMA said Congress should instead update payments to align them with practice cost increases.
"The government projects nine years of Medicare cuts totaling about 40 percent, while at the same time, practice costs will increase 20 percent," AMA's William Hazel, MD, said in a press release. He noted that about 60 percent of physicians have said they will take fewer Medicare patients if the 10 percent cut is enacted.
Hazel said AMA is asking Congress to "enact legislation that lays the groundwork for complete repeal of the fatally flawed Medicare physician payment system."
A CMS spokesperson said today that the agency does not speculate on what will happen in the final rule, including the possibility that Congress may change the statutory formula.