Medicare physician pay set to be cut 29.5% in 2012

The latest CMS estimate, which could be revised, assumes that Congress will not step in to override cuts required by law.

By David Glendinning — Posted March 10, 2011

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Physicians who provide care for Medicare patients face a nearly 30% rate cut starting next January unless lawmakers can agree to prevent the reduction.

Centers for Medicare & Medicaid Services Deputy Administrator Jonathan Blum, who also directs the agency's Center for Medicare, detailed the latest estimate in a letter to Medicare Payment Advisory Commission Chair Glenn Hackbarth, posted on the agency's website (link).

Because Congress has not implemented a permanent overhaul of the sustainable growth rate formula that helps determine physician pay, CMS is required to calculate the 2012 rate as if congressional short-term patches dating back to the beginning of 2007 had never occurred. The figure may be revised slightly when more updated physician pay data become available in the fall.

If lawmakers do not act again, the 29.5% cut will take effect Jan. 1, 2012, when the latest short-term patch runs out. For years, physician organizations have been pushing for the payment formula to be scrapped in favor of a permanent fix.

"This short-term relief has been critical -- but so too is a long-term solution," Blum wrote. "We will continue to work with Congress to fix this untenable situation so doctors no longer have to worry about the stability and adequacy of their payments from Medicare."

MedPAC is set to release its annual payment report to Congress on March 15. The panel typically recommends that physician pay be increased each year based on the higher costs of providing care to patients, minus a slight percentage based on the assumption that doctors practice more efficiently over time.

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