The Medicare physician payment formula, long a source of grief for doctors, has gotten the attention of members of Congress who are pushing to change the formula.
Last week, Rep. Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, and Rep. Nancy Johnson (R-Conn.), chair of the panel's health subcommittee, sent a letter to CMS Administrator Mark McClellan proposing changes to the formula to increase Medicare payments to doctors. At the same time, Johnson is drafting legislation to make permanent changes to the formula. The subcommittee is scheduled to hold a hearing on Medicare payments to doctors this week.
At issue are cuts in Medicare reimbursements to doctors that, according to the letter, will average 5% annually for the next seven years-levels that Thomas and Johnson said are "simply unacceptable." The Medicare Modernization Act of 2003 averted scheduled cuts of 4.5% in 2004 and 2005, giving doctors a 1.5% increase each year instead. In 2006, however, doctors face a 4.3% cut in Medicare rates.
In particular, doctors have complained about the sustainable growth rate, or SGR, component in the formula under which physician reimbursements are adjusted up or down each year to meet targets set for spending on physician services.
In their letter, Thomas and Johnson don't propose changes to the SGR. Instead, they propose eliminating prescription drug and biological expenditures from the payment formula and ask the CMS to consider the effect of new Medicare benefits on physician costs in determining reimbursements.
The legislation being drafted by Johnson, however, does seek to repeal the SGR over time and replace it with updates based on annual cost increases, according to a physician representative who was briefed by Johnson last week on her bill.