Washington & You

Key Points

Washington - A new report to Congress this month by the Medicare Payment Advisory Commission (MedPAC) is expected to recommend that lawmakers approve an average increase in Medicare physician fees of 1.1 percent for 2009, rather than allowing a scheduled 5 percent reduction to take effect.

The recommendation will be presented by MedPAC in its March report to Congress, even as lawmakers must deal with extending a temporary 0.5 percent Medicare pay raise that was enacted late last year for the first six months of 2008 to avoid a 10.1 percent cut that had been scheduled.

If no action is taken, the full cut will be imposed effective July 1.

"We all recognize that a plus 1 percent is much better than minus 5 or 10 percent," says commission member Ronald D. Castallanos, M.D., of Southwest Florida Urologic Associates.

"But it doesn't keep up with our costs. This is still, by the medical community, going to be looked at as a terrible message. And quite honestly, it's insulting," he says.

Pointing out that many physician groups have been attempting to reform the Medicare payment system and toss out the Sustainable Growth Rate (SGR) formula that is blamed for much of the update cuts scheduled to continue through 2016 unless action is taken, Dr. Castallanos calls the six-month "fix" passed by Congress a "fiasco."

He says physician costs are increasing dramatically - some estimates say by as much as 40 percent since 2001 - but the conversion factor used to set rates has not changed.

"So we really haven't had an increase, but our costs are continuing to go up," Dr. Castallanos tells Dermatology Times.

Dr. Castallanos' comments came during a discussion period following the recommendation by MedPac staff for the 1.1 percent increase, which would be based on the projected change in "input prices" for physicians' services, less the commission's expectation for productivity growth.

"Based on our current estimates of input price increases, which is 2.6 percent for 2009, and expected productivity increases, which is 1.5 percent, the resulting 2009 update recommendation is approximately 1.1 percent," says MedPAC policy analyst John Richardson.

"Compared to the projected negative 5.0 percent update that would occur in 2009 under current law, the recommended update of 1.1 percent would stabilize the physician payment system while Medicare moves forward to improve the value of physician services it purchases," he says.

Mr. Richardson says the 1.1 percent raise would cost more than $2 billion in 2009 and more than $10 billion over the next five years. It would also result in an unspecified increase in Part B insurance and coinsurance amounts for physician services, he added.

A key foundation for the MedPAC recommendation was a 2007 survey of patients that indicated:

"Taken together, the result of our 2007 beneficiary access survey led us to conclude that, at least from a national perspective, beneficiary access to physician care is good for the vast majority of Medicare beneficiaries, but also that pockets of access difficulties do exist, especially for beneficiaries seeking new primary care physicians," Mr. Richardson says.

He also notes that two surveys conducted in 2006, one by the commission and one by the National Center for Health Statistics, found that most physicians are accepting new Medicare patients.