Medicare / Medicaid

Medicare physician payment reform -The opportunities ahead

In late 2006, with America's physicians and their patients calling for action, Congress passed legislation to prevent a scheduled 5 percent cut in 2007 Medicare physician payments, and instead froze payment rates for one year.

While an important reprieve, there is more work to be done. The Congressional Budget Office recently predicted that Medicare physician payment rates would be reduced 10 percent in 2008. The 2006 Medicare Trustees report predicts a total of nearly 40 percent in cuts by 2015!

It is critical that a permanent, long-term replacement for this payment formula be identified as it is producing disastrous effects. In addition to generating the forecasted 40 percent pay cuts by 2015, the formula:

Has kept average 2007 Medicare physician payment rates about the same as they were in 2001

  • Has prevented physicians from making needed investments in staff and health information technology to support quality measurement
  • Punishes physicians for participating in initiatives that encourage greater use of preventive care in order to reduce hospitalizations
  • Has led to a budget baseline that is widely viewed as unrealistic and that has driven policymakers to enact short-term interventions that have increased both the duration of cuts and the cost of a long-term, permanent solution

See the AMA Physician Payment Action Kit for more information, and then take your findings and use them as an opportunity to talk to your patients, your colleagues and most importantly, your members of Congress.
Also, sign up for the AMA Physician Grassroots Network to receive updates on the Medicare physician payment rate legislation as we move forward.