Medicare reimbursement to physicians -- scheduled for an estimated 26% rate cut over six years -- would instead increase no less than 2.7% in 2006 and subsequently be updated annually based on increases in physician practice costs, under a bill introduced in the House. The cost-based update would replace the widely criticized "sustainable growth rate" formula now used to determine annual changes in Medicare's physician rates, long one of the top legislative priorities of physician organizations. Meanwhile, separate legislation introduced in the Senate by Debbie Stabenow (D-Mich.) and John Kyl (R-Ariz.) would override the sustainable growth rate formula in the next two fiscal years, establishing a 2006 update of 2.7% and a likely 2007 update of 2.6%.
The controversial formula adjusts physician payments up or down annually based on an established target for Medicare spending. Numerous organizations, including the Medicare Payment Advisory Commission and the American Medical Association, have said the formula is a lousy way to control the volume of services Medicare beneficiaries receive and a poor way to compensate physicians. The sustainable growth rate formula "does not accurately reflect beneficiary utilization of doctor services," said Rep. Clay Shaw Jr. (R-Fla.), co-sponsor of the House bill with Benjamin Cardin (D-Md.). -- by Ralph Loos