CMS: 21.2% Medicare pay cut for doctors unless Congress acts

Washington The final 2010 Medicare physician fee schedule confirms that physicians face a 21.2% pay cut starting Jan. 1, 2010, unless Congress adopts legislation to avert it. The official figure is only slightly lower than the 21.5% reduction the Centers for Medicare & Medicaid Services was predicting earlier this year.

The Obama administration supports a permanent repeal of the current physician payment formula and has called on Congress to pass legislation to that effect. But CMS noted in the final rule that, without congressional action, it is required by Medicare statute to implement the across-the-board cut, which will apply to the 2010 conversion factor.

In response to the final fee schedule rule, the American Medical Association reiterated that Congress must fix the formula permanently this year or risk leaving seniors, baby boomers and military families without access to physicians.

"Permanent repeal of the payment formula is an essential element of comprehensive reform to improve the health system for patients and physicians," said AMA President J. James Rohack, MD. "Security and stability for America's seniors will not be achieved without a permanent solution to the broken Medicare physician payment formula."

The final rule did contain some good news for physicians worried about future rate cuts. CMS finalized a proposal to remove physician-administered drugs from the calculation of the Medicare physician pay formula, a move that will mitigate future reductions. Organized medicine has argued for years that by including the cost effect of Part B medications -- the price of which doctors cannot control -- the system has artificially caused total spending on physician services to exceed predetermined limits, triggering deeper pay cuts.

"This is a long overdue step on the road to permanent reform, as it significantly lowers the cost of fixing the formula once and for all," Dr. Rohack said. "AMA called for this action and thanks the Obama administration for its recognition that physician-administered drugs do not belong in the payment formula."

While this decision will not affect 2010 pay rates, it is expected to have a positive effect on future payment updates by making required cuts less severe and by shortening the number of consecutive years that doctors will face reductions, CMS said.

Not every physician would see their rates go down by the same amount in 2010 if Congress were to allow the cut to go through. Over the next four years, CMS will phase in refinements to practice expense relative value units based on updated data from an AMA survey. As a result, physicians in specialties traditionally considered to be primary care will see higher rates before the application of the 21.2% cut required by the pay formula, while some other specialists will see further pay reductions based on the relative value unit revisions and other adjustments.

The final rule is set to appear in the Nov. 25 Federal Register. CMS will accept comments until Dec. 29.