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ACP Decries Medicare Final Rule on Fee Schedule Urges Congress to Take Action

(Washington, DC): Medicare released the final rule for its 2004 physician fee schedule on October 31, drawing an immediate call from the American College of Physicians (ACP) for Congress to take immediate action to prevent a reduction in payments.

The rule results in a 4.5 percent reduction in Medicare physician payments for 2004. This cut would be the fifth cut since 1991, and would be on top of a 5.4% cut in 2002. Additional cuts are also estimated for 2005, 2006, and 2007. From 1991-2003, payment rates for physicians and health professionals fell 14% behind practice cost inflation, as measured by Medicare's own conservative estimates.

"Time is running out for Congress to take action to avert a Medicare meltdown," said ACP President Munsey Wheby. "Positive payment updates for physicians and other affected health professionals of no less than 1.5% for each of 2004 and 2005 must be included in the final conference report for the "Medicare Prescription Drug and Modernization Act of 2003" and Congress must assure that such measures are enacted into law in time to avert more cuts. America's Medicare patients will find access to health care providers increasingly difficult as physician practices struggle to reconcile rapidly rising costs with declining reimbursements."

Fewer physicians are now willing to see new Medicare patients, at least in part due to Medicare payment cuts. The percentage of physicians saying they accept all new Medicare fee-for-service patients declined by 7.2 percent from 1999 to 2002.

An ABC-Washington Post poll released early in October showed significant decreases in the percentage of seniors able to see a doctor when they need one. The number of Medicare/Medicaid beneficiaries very satisfied with their ability to see medical specialists dropped from 74 percent in 1995 to only 48 percent in 2003. Of those surveyed, 22 percent expressed dissatisfaction with their ability to see medical specialists.

The cuts in 2004 and subsequent years are due to the Medicare payment update formula, which is flawed for two reasons: First, payment updates are based on a sustainable growth rate (SGR) system, which is tied to the gross domestic product (GDP). This means that when GDP declines as the economy softens, payments decline as well. The medical needs of patients, however, do not decline during economic downturns.

Second, physicians and health professionals are penalized with lower payments when volume increases exceed the SGR spending target. Yet, there are a number of factors driving these volume increases that are often beyond physicians' control, including government efforts that promote greater use of physician services through new coverage decisions, quality improvement activities and many other administrative decisions that, while good for patients, are not reflected in the SGR.

"Congress must act to fix this problem," said Dr. Wheby. "Otherwise, Medicare will suffer a decline in access and quality that will be difficult to ever reverse."

The American College of Physicians is the largest medical specialty organization and the second-largest physician group in the United States. ACP members include more than 115,000 internal medicine physicians (internists), related subspecialists, and medical students.

Jack Pope, 202-261-4556, jpope@acponline.org

Page posted: 11/03/2003

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