WASHINGTON – The Centers for Medicare & Medicaid Services has issuing a final rule calling for a 10.1 percent reduction in payment rates.
The new rule was met with disdain from physician groups, which are counting on Congress to intervene to lessen or eliminate the reductions.
The rule and its revised payments, quality incentive rates and policy changes was published November 1 in the Federal Register. A double-digit reduction in 2008 payment rates has been anticipated for almost an entire year.
The rule includes a 10.1 percent reduction, based on calculations in the sustainable growth rate formula that assesses the rate of payment growth for physician-related services. SGR compares the actual rate of growth in spending with a target, which is based on such factors as the growth in the number of Medicare fee-for-service beneficiaries.
The SGR, implemented as part of the Balanced Budget Act of 1997, reduces the update because the growth in volume and intensity of physician services has resulted in more expenditures than originally targeted. Those targets are set using a calculation
primarily based on the 10-year annual average growth in real gross domestic product per capita.
For the last five years, Congress has intervened to temporarily suspend requirements of the SGR. However, Congress' last-minute deferral of a 5-percent cut to Medicare reimbursements last year increased the likelihood that physicians would face as much as a 10 percent cut in 2008, the Congressional Budget Office warned in February.
According to the CBO, a provision in the Tax Relief and Health Care Act of 2006 specifies "payment rates will revert to the prior-law level in 2008." This is a result of the budget neutrality of the SGR formula – the methodology for reimbursing Medicare Part B services.
"CMS will continue to work with Congress and physician groups to identify payment methods that help improve the quality and efficiency of care in a way that is mindful to not increase costs to taxpayers, Medicare and its beneficiaries," said acting CMS Administrator Kerry Weems. "Medicare needs to compensate physicians appropriately for the services they furnish to people with Medicare. We believe the early work on the Physician Quality Reporting Initiative is one of those reforms that can help lead to better quality and more efficient care."
Under the new rule, Medicare estimates it will pay about $59 billion to about 900,000 physicians and other healthcare professionals.
Responses from physician organizations were swift and decidedly negative.
"Next year's 10.1 percent physician payment cut is bad news for America's seniors, as 60 percent of physicians say the cut will force them to limit the number of new Medicare patients they can treat," said Edward Langston, MD, board chairman of the American Medical Association. "Congress must step in to replace the cut with payment increases that keeps up with medical practice costs.”