Medicare Reform Includes 2-Year Fee Schedule Fix: Medicare Drug Law Blocks 4.5% Cut in 2004

Article excerpt

WASHINGTON -- Physicians have 2 more years to lobby for a permanent legislative fix to Medicare's flawed reimbursement formula.

The historic $400 billion Medicare overhaul/prescription drug bill (H.R. 1) blocked a projected 4.5% cut to physician reimbursement in 2004 and provided payment increases of not less than 1.5% in 2004 and 2005.

The bill was approved by both houses of Congress in late November and signed in early December by President Bush.

The legislation "buys us 2 years to try to get a permanent fix enacted," Bob Doherty, senior vice president for governmental affairs and public policy at the American College of Physicians, told this newspaper. It does not actually correct the flaw in the fee schedule's formula, which cuts payments whenever the costs of Medicare services exceed growth in the economy.

In a letter to Senate Majority Leader Bill Frist (R-Tenn.), the American College of Obstetricians and Gynecologists encouraged Congress to find a long-term solution to the Medicare payment formula, to ensure stable payments in the future.

"ACOG understands that budgetary constraints only allow for a short-term fix to the flawed physician payment issue," ACOG Executive Vice President Ralph Hale wrote. "However, we remain deeply concerned about the deep cuts in payments slated after 2006."

It is more likely, however, that nothing will be done until 2005, as "Congress won't want to take up Medicare next year," Mr. Doherty predicted. The ACP, in the meantime, will continue to lobby for a fix, he said.

"When it costs more to see a patient than what you are paid, it's hard to keep the doors open," Dr. Donald Palmisano, president of the American Medical Association, said in praise of the bill.

"By strengthening rural health care, halting the planned Medicare pay cuts, and reducing Medicare's regulatory burdens, more physicians will be able to continue to participate in Medicare--and seniors will not have to worry about finding a doctor when they need one," Dr. Palmisano said.

Physician groups will continue to press the Centers for Medicare and Medicaid Services to remove Medicare-covered out-patient drugs from the Sustainable Growth Rate, a component of the physician fee formula. The AMA estimates that eliminating these drugs from the formula could add $25 billion to $80 billion to expenditures for physician services over the next 10 years.

In other payment relief provisions, the huge Medicare reform bill eliminated any reductions to Medicare reimbursements that occur as a result of geographic adjusters, such as local variations in labor, practice, and medical liability insurance.

Measures to enhance preventive care services under Medicare also were included in the bill:

* A "welcome to Medicare" initial physical examination will be offered to new beneficiaries, although it was not known at press time how it will be reimbursed.

* Screenings for early detection of cardiovascular disease and laboratory screening for individuals at high risk for diabetes will be covered, as will more disease management programs for Medicare beneficiaries. While many provisions of the reform legislation directly impact physicians, a major part--the Medicare prescription drug benefit--mostly impacts patients.

Under a new voluntary program--known as Medicare Part D--coverage will involve:

* A $35 average monthly premium. …