Cutting Medicare Physician Payments – Beyond the 10.6%

The focus on Medicare payments to physicians for the last six months has been on the 0.5% increase Congress enacted for the first 6 months of 2008 to replace the 10.1% reduction that would have occurred under Medicare’s Sustainable Growth Rate (SGR) formula. Legislation to continue this rate for the rest of the year failed a required procedural vote in the Senate last week.* This leaves Medicare physician payments after June 30th uncertain – although it is expected that Congress will do something in the next week, or three.

However, beyond the impending Medicare 10.6% reimbursement reduction for all physicians, the Graham Center of American Academy of Family Physicians published a short report on June 13th that expands the analysis to include pending change in how Medicare reimburses physicians in Physician Scarcity Areas (PSAs), and Health Professional Shortage Areas (HPSAs). As the report’s summary table below shows, the PSA 5% reduction would effect about 25,000 primary care physicians and over 7.5 million Medicare beneficiaries. And these payment reductions would be on top of the impending 10.6% Medicare payment reduction.

PSA and HPSA Medicare Cuts 2008

With the general consensus being that we have a shortage of primary care clinicians, cutting Medicare payments to physicians in underserved areas seems truly unwise. And doing it at the same time that Medicare’s overall reimbursement formula for physicians is being so contentiously debated is really a bad idea.

If the PSA and HSPA programs would benefit by being adjusted to redefine their geographic or other targeted goals, then that should be done as part of comprehensive strategies and plans for improving Medicare’s payment system to ensure Medicare beneficiaries have continued access to physicians – particularly those providing primary care services. Making reductions to the PSA and HSPA programs right now seems like the right and left hands of government don’t know what they are doing.


* This legislation would have also implemented a 1.1% increase for 2009 instead of the SGR formula’s reduction of 5%

One thought on “Cutting Medicare Physician Payments – Beyond the 10.6%

  1. I have been sending the following note to all senators. The format was obtained from the American Academy of Family Physicians. You can do the same by following the instructions on AAFP website.

    Dear Senator ____:

    As an internist, I urge you to support the Medicare improvements for Patients and Providers Act of 2008 (S. 3101).

    The bill would keep the Medicare payment rate to physicians at the current level. Unless Congress acts to stop the pay-cuts, internist payments will be hit with an 11 percent decrease in Medicare payments after June 30. I need the present Medicare payments to help my costs in doing business.

    I urge you to support the Baucus Medicare bill and help internists stay in business and continue to provide quality care for Medicare recipients. The consequences will be dire if the pay-cuts are not stopped. The physicians are very serious this time in not providing care to Medicare patients. STOP THE PAY-CUTS!!

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