Physician payments are likely to decline by 40% from 2005 to 2014 unless Congress or the CMS acts to change the formula Medicare uses to calculate annual adjustments. That's the prediction made in a letter sent yesterday to CMS Administrator Mark McClellan by Senate Finance Committee Chairman Charles Grassley (R-Iowa) and ranking member Max Baucus (D-Mont.). In addition to steps already suggested by the House Ways and Means Committee, the senators called on McClellan to accurately account for the "ripple effects" of last year's Medicare reform law when calculating physician payments. The Medicare law will prompt an increase in the volume of patients physicians treat, and the sustainable growth rate formula, or SGR, should account for that, the senators argued.
Under the SGR, physician rates are adjusted up or down annually to meet an established target for spending on physician services. Last year's Medicare reform law gave physicians a 1.5% payment increase in 2004 and 2005, averting a scheduled decrease for those years under the SGR. Earlier this month the General Accounting Office said that without more permanent changes to the SGR, physicians will see annual pay cuts of roughly 5% for seven consecutive years beginning in 2006. "We respectfully request that you both readjust and reassess physician payment in the areas outlined," Grassley and Baucus said in their May 27 letter to McClellan. A CMS spokeswoman said the agency would not comment on the letter until officials had a chance to review it. -- by Jeff Tieman