The Medicare Payment Advisory Commission released a draft recommendation to update physician payments by 0.8 percentage points less than projected inflation in 2006, or 2.7%, during the second of two days of MedPAC meetings. The advisory body said staff had found no evidence that physicians were abandoning Medicare because of low payments or that beneficiaries were losing access to physician services, despite physician organizations' allegations to the contrary. The ratio of participating doctors to Medicare beneficiaries rose to 12.3 doctors per 1,000 beneficiaries in 2002, compared with 11.7 per 1,000 in 1999. MedPAC said the current "sustainable growth rate" methodology for compensating physicians was "flawed as a method for volume control" and alternatives should be considered, but no specific proposals were presented. Physicians received 1.5% updates in both fiscal 2004 and 2005. Under the sustainable growth rate formula, physicians had been scheduled for a Medicare rate cut in 2004.
The physician update was just one of several draft recommendations likely to generate considerable controversy. In its Thursday meetings, MedPAC proposed giving hospitals a full-inflation update in 2006, legalizing physician-hospital gain-sharing arrangements and eliminating the "whole hospital" exemption in Medicare self-referral law. Commissioners will vote on the final forms of their recommendations to Congress in January. Congress has no obligation to accept them. -- by Tony Fong and Mark Taylor