For the first time since 1996, CMS is readjusting the cost of malpractice insurance in its calculation of Medicare physician fees, but even with allowance for a 21.7% increase in malpractice expenses, physician fees are due to fall by 4.2% next year.
CMS officials described the change in malpractice relative value units (RVUs) Tuesday in a "Physician Open Door Forum" with medical society representatives, according to John Ciccone, spokesman for the American Society of Cataract and Refractive Surgery in Fairfax, Va.
Ciccone says the change is part of a CMS proposal to rebase its Medicare Economic Index (MEI), which was detailed in the agency's proposed rule changes announced on Friday.
In addition to the 21.7% increase in malpractice RVUs, the proposal would decrease physician work and practice expense RVUs by 0.35% and 1.15% respectively, Ciccone adds.
CMS says the projected 4.2% cut may be revised before it publishes the final rule on Nov. 1.
CMS has blamed the cut on a slow-growing economy and significant growth in physician expenditures in 2002. But physicians' groups blame the cuts on a faulty calculation of the CMS sustainable growth rate (SGR), another component of the payment formula.
CMS says the SGR can only be changed by Congressional action, but as projected cuts have emerged in recent years, Congress has only acted to change the current year's cut rather than the underlying SGR.
For example, earlier this year, Congress replaced a planned 4.4% cut in Medicare physician fees for 2003 with a slight increase.
But Ciccone says it will be harder for Congress to come to the rescue so this year. The House version of the Medicare drug benefit bill includes a minimum 1.5% fee increase for physicians, but the Senate version is silent on the matter.
Ciccone says a Senate-House committee reconciling the two versions of the bill is under great pressure to keep spending in check and use available funds for a Medicare drug benefit.