Deeper Medicare fee cut is imminent: Will Congress block it?

The dramatic, but not unexpected, cut is contained in a proposed rule released July 2 by the Centers for Medicare & Medicaid Services that would revise payment rates and policies under the Medicare Physician Fee Schedule.

"This proposed rule is a further step in Medicare's efforts to ensure that payment policies provide incentives to improve quality of care," said CMS Acting Deputy Administrator Leslie V. Norwalk, Esq.

"Today's release of the proposed 2008 Medicare physician payment rule serves as yet another reminder of the need for congressional action to stop scheduled payment cuts to physicians," he declared. "Next year alone, Medicare will cut payments to physicians by 10%. Over 9 years, the cuts swell to 40%, while medical practice costs increase 20%. The numbers just don't add up."

The sharp reduction in fees was necessitated because Congress, for the past several years, has intervened and stopped "negative updates" (ie, fee cuts) in their tracks, providing immediate relief, but only postponing eventual larger reductions unless the system for determining Medicare fees is reformed. Complicating the matter is the continuing pressure to reduce federal domestic spending and to curtail steadily climbing health care costs.

"Today, Medicare pays doctors the same as it did in 2001," Dr. Wilson pointed out. "More than 60% of doctors say they will be forced to limit the number of new Medicare patients they can treat when the cut goes through. Seniors' access to health care is in jeopardy."

Noting that over the past 5 years, Congress has intervened to prevent implementation of negative updates resulting from the sustainable growth rate (SGR) formula provided by Medicare law, Norwalk said CMS will continue to work with lawmakers and physician groups "to identify payment methods that help improve the quality and efficiency of care in a way that is cognizant of the costs to taxpayers and to Medicare and its beneficiaries."

She acknowledged that "the Medicare program needs to compensate physicians appropriately for the services they provide," but added that how the program pays also matters. That means focusing on quality and performance, the mantra of the current administration.

The proposed fee schedule rule also includes a revision in the way the agency will pay for Part B drugs, a sticking point for many urologists. Under the proposal, the average sales price (ASP) for Part B drugs would be determined by requiring drug manufacturers to reduce their prices based on volume: what CMS calls "bundled price concessions." The ASP would be based on the dollar value of units of each drug sold under the bundled arrangement.

CMS said such a requirement would help ASPs better reflect the true costs incurred by physicians when purchasing Part B-covered drugs. The issue stems from Medicare's conviction that physicians are profiting unduly from Part B drugs, such as those used to treat prostate cancer.

In mid-May, nearly 80 professional medical organizations sent a letter to every congressional lawmaker outlining recommendations for overhauling the Medicare reimbursement system.