In a report to Congress issued Monday, the Medicare Payment Advisory Commission recommended a 2.5% increase in Medicare physician fees and cuts in Medicare payments to ambulatory surgery centers.
The report, coupled with testimony to Congress scheduled for Thursday, starts a congressional review process that could lead to new legislation, according to MedPAC spokesman Kevin Hayes.
MedPAC's recommended 2004 increase for physicians comes even as CMS, within the next few weeks, is expected to predict that physicians fees will be cut next year.
Hayes says that's because CMS must use a rate-calculating formula that MedPAC has abandoned. The commission last year recommended to Congress that the formula should be abolished because it is unfair and unpredictable, but Congress did not make that change last year, he says.
Hayes says the formula is flawed because "it's really hard to get everything into this formula," such as whether patients have adequate access to care. And because some economic indicators are included in the formula, "the numbers move around a lot in very unpredictable ways," he adds.
Hayes says MedPAC's 2004 recommendation assumes a "modest" increase in fees this year, similar to the 1.6% rise that was enacted after the report was drafted and went into effect Saturday.
MedPAC also assumes the current rate is adequate, but changes in inflation and productivity will require the 2.5% rise next year, he says. Specifically, the 2004 rate assumes 3.4% inflation, then subtracts 0.9% for estimated productivity growth, he says.
Meanwhile, the MedPAC report includes two proposed Medicare cuts for ASCs that the panel approved on Jan. 16. One is the elimination of a scheduled payment update for ASCs in fiscal year 2004. The other is cutting payments to ASCs by an average of 7% and as much as 50% in certain procedures, so that these payments would not exceed payments to hospital outpatient facilities for the same services.