Medicare Physician Payment Cuts — 60 Day Delay
Congress has been debating health care reform for several months now. Part of the discussion includes a long-term solution to the flawed Medicare physician payment formula.
Medicare physician payment rates are determined by the sustainable growth rate (SGR) formula which is based on several factors including:
- Estimated change in fees for physician's services,
- Estimated change in beneficiaries enrolled in Medicare's fee-for-service program,
- Estimated growth in real gross domestic product (GDP) per capita,
- Estimated change in expenditures due to law and regulation.
If utilization of physician services increases above this arbitrary target growth rate, the reimbursement per service performed actually drops. Over the last few years, physicians have faced cuts because of the formula.
To date, Congress has always stepped in to prevent the cuts, but this strategy only shifted the cost to out years leaving physicians facing a 21.2 percent cut in 2010.
The Society has been advocating for the replacement of the SGR formula with a stable mechanism for updating Medicare fees to continue to assure Medicare beneficiary access to high quality care.
While various payment options were proposed in the past year in both the House and the Senate during the health care reform debate, Members of Congress so far have not agreed on a permanent solution.
Before recessing, Congress responded to the threatening January 2010 cuts by including a 60-day patch in the FY 2010 defense appropriations legislation. The patch will delay implementation of the scheduled 21.2 percent cut in Medicare physician payments by extending the 2009 conversion factor for 60 days. This will give lawmakers time to move forward with a longer-term solution to the physician payment formula.
The week of December 21, the proposed one-year, 0.5 percent patch to the SGR was eliminated from the Senate health care reform legislation with a statement from Senate Majority Leader Harry Reid (D-NV) that he intends to pass legislation to permanently repeal the SGR formula after the holidays.
