News | November 05, 2006

Medicare Cut for Doctors Now Official

Doctors caring for the elderly and the disabled will see a 5 percent cut in reimbursement rates when they treat Medicare patients next year. But in an effort to give more personalized care, the government will pay physicians more to counsel patients on ways to improve their health.

Doctors warned that that the lower rates would lead to fewer doctors taking on new Medicare cases. The new rates were announced in rules the Centers for Medicare and Medicaid Services made public Wednesday.

Doctors are paid for 7,000 different services. The average cut for a particular service is 5 percent; some services are reduced more, while other services are increasing. For instance, payments will go up by about one-third for office visits — the most frequently billed service.

The rules affecting 900,000 doctors "will encourage physicians to spend more time with their patients, assessing their health status and educating them about how to live longer, healthier lives," said the agency's administrator, Leslie Norwalk.

Doctors were not happy about the announcement, which they had expected. Nearly half of physicians face payment cuts ranging from 6 percent to 20 percent, the American Medical Association said.

For the great majority of primary care physicians, the overall cut "will negate any payment increases specific to physician office visit payments," said Dr. Cecil B. Wilson, chairman of the AMA's board of trustees.

The overall cut is based on a formula that calls for lower payments to offset increases in the volume of care that patients get from their doctor. For example, the average patient has more screenings and tests than they used to have, but that leads to downward pressure on reimbursements.

Since 2003, the formula has called for physicians to see their reimbursement rates cut, but Congress has intervened each year to suspend the formula. Doctors are pleading for lawmakers to do the same this year.

In another rule, hospitals will get a 3 percent increase in reimbursement rates for outpatient care.

But officials said they are concerned about the growth rate in outpatient care, and beginning in 2009, they will require hospitals to report data about the quality of care they provide. Failure to report that data would lead to lower reimbursement rates for those hospitals.

Home health agencies will see a 3.3 percent increase in reimbursements during 2007. The government did change how it will pay the agencies and other suppliers for oxygen and oxygen equipment. This move is designed to save taxpayers and beneficiaries millions of dollars in future years.

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