Health Policy Advisor
June 2006
CMS Forecasts 4.6% Cut in Physician Payments for 2007
AMA Seeks Congressional Intervention
CMS is forecasting a 4.6% cut in physician payments in 2007, leading the American Medical Association to ask for Congressional intervention. CMS is required to provide Congress and the Medicare Payment Advisory Commission (MedPAC) with an estimate of the next year's physician fee schedule update. On April 7, 2006, CMS estimated that the update would be -4.6% and the conversion factor would be $36.1542.
CMS points to a 7% increase in spending for evaluation and management services as having a significant impact on the growth in physician spending in 2005. The AMA warns that the Medicare Trustees Report projects steep long-term cuts in Medicare payments to physicians that will harm seniors' access to care. "Next year's cut of 4.7 percent is just the beginning, as the Trustees now project that Medicare physician payments will fall 37 percent over the next nine years," said Duane M. Cady, MD, AMA Chair. "At the same time as these steep Medicare cuts, the government projects that practice costs will increase 22 percent. The numbers just don't add up, especially considering that these cuts follow five years of Medicare payments that do not cover increases in medical practice costs."
According to AMA survey data, nearly half, 45 percent, of the physicians surveyed by the AMA say next year's Medicare cut will force them to either decrease or stop seeing new Medicare patients. Physicians want to treat seniors, but Medicare cuts are forcing physicians to make difficult practice decisions. "Doctors are stuck between a rock and a hard place as they try and do more to improve the quality of medical care for seniors with fewer resources," said Dr. Cady. Under the current Medicare payment system, doctors are penalized with lower payments per service for doing more to help prevent disease and care for patients. The large gap between Medicare payments and practice costs is a huge barrier to physician investment in technology used to improve quality.
The AMA urges Congress to take an immediate step to preserve seniors' access to physicians by tying Medicare physician payments to the cost of caring for seniors. AMDA has joined with the AMA to petition Congress to stop the payment cuts and replace a flawed physician payment formula, which penalizes physician for providing necessary care to Medicare payments. For more information on the payment formula, see the federal legislative news.
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