Change in Medicare Cut Not Enough

Medicare cost growth was lower than expected this year, which means that although there will be a reduction to the previously expected 29.5% cut on Jan. 1, the cut to reimbursement is still a high 27.4%.

Physicians have been dreading the upcoming 29.5% cut to Medicare reimbursement, scheduled for January 1, 2012, and on Tuesday the Centers for Medicare and Medicaid Services (CMS) announced a change. Instead of the almost 30% cut, physicians can look forward to a reduced cut of 27.4%.

The reduction of the cut hasn’t put medical professionals at ease as they still view the cut as too steep and makes them question if they will continue to accept Medicare patients.

“This cut, although slightly less than previously estimated by [CMS], would create devastating access problems for patients, and would more than offset modest improvements in primary care and other undervalued services also included in the rule,” said Virginia Hood, MBBS, MPH, FACP, president of the American College of Physicians, in a statement.

The fact that Medicare cost growth has been lower than expected resulted in the change from March’s estimate of 29.5%. This is the eleventh time the Sustainable Growth Rate has resulted in a payment cut. Every year after the first cut in 2002, Congress has postponed the expected cut, which is why the one scheduled to take place on Jan. 1 is so steep. Of course, if the upcoming cut is also postponed, it will simply result in an even steeper one for 2013.

"Many physicians are already struggling with inadequate Medicare payment rates and the ongoing threat of future cuts from this broken physician payment formula,” said Peter W. Carmel, MD, president of the American Medical Association, in a statement. “Payments for Medicare physician services have fallen so far below increases in medical practice costs that there is a 20% gap between Medicare payment updates and the cost of caring for seniors.”

The American College of Physicians and other medical organizations are calling for Congress to repeal the SGR formula, which was initially adopted as part of the Balanced Budget Act in 1997.

“This payment rate cut would have dire consequences that should not be allowed to happen,” said Donald M. Berwick, MD, CMS administrator. “We need a permanent SGR fix to solve this problem once and for all.”

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