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Medicare May Cut Physician Fees in 2002
by Stephen Barlas
Geriatric Times November/December 2001 Vol. II Issue 6
The American Medical Association is working to avert across-the-board cuts in Medicare physician fees in 2002. A spokesperson for the Center for Medicare & Medicaid Services (CMS), who declined to be identified, said the agency hopes to avoid a cut.
Because of inputs into a preset Medicare-fee update formula, the AMA has been warning medical specialty societies that CMS might cut fees somewhere in the neighborhood of 2% to 3%. The 2002 schedule will be announced the first week of November. As background, each CPT code is assigned a relative value unit (RVU). The RVU is multiplied against a conversion factor, $38.26 in 2001, to calculate the fee Medicare pays for that service. The conversion factor is updated each year. The updated percentage--plus or minus--is determined by multiplying an updated adjustment factor against the Medicare Economic Index, which is a medical cost inflation factor. The updated adjustment factor is determined by the Sustainable Growth Rate (SGR), which compares growth in physician billing per patient to growth in the gross domestic product (GDP). If accurately calculated it should allow per-beneficiary spending to grow at the rate of increase of GDP.
The slowing economy cut the 2001 GDP below expectations. The difference between the 2001 GDP and the increase in physician billing of Medicare is expected to be wide. That spread will result in a negative updated adjustment factor that will be reflected in the fee formula all the way back to the conversion factor, which could be set at less than $38.26 in 2002.
The CMS spokesperson called the update issue “very, very technical.” She added, “We are aware of the problem being raised by the AMA.”
Yank Coble, M.D., president-elect of the AMA, talked about a possible 2002 reimbursement reduction, “This would be very discouraging to physicians because they’re so well aware of the increased regulatory factors that have not only increased their cost of caring for patients...but also decreased their productivity.”
The AMA has been working with CMS through the fall to secure a temporary change in some part of the update factor to avert a negative update for 2002. If that fails, medical groups will try to get the U.S. Congress to intercede. But don’t expect the folks on Capitol Hill to be overly sympathetic, given the 10% increase in fees in the last two years. One lobbyist for a pulmonary groups says he would be flabbergasted if Congress stepped in on this issue.
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12/01
