CMS Reduces Planned Medicare Fee Cut

Medicare's scheduled cut in payments to physicians will not be quite as much as previously thought, the Centers for Medicare & Medicaid Services (CMS) said when it released the 2012 physician fee schedule. Instead of 29.5 percent, the cut will be 27.4 percent because Medicare spending increased less than expected.

"Obviously, this remains a completely unacceptable situation," said TMA Executive Vice President/Chief Executive Officer Louis J. Goodman, PhD.

The reduction – mandated by the Sustainable Growth Rate (SGR) formula – takes effect Jan. 1 unless Congress intervenes to stop it, which it has done in each of the last 12 years. TMA, the American Medical Association, other state medical societies, and national specialty societies urged the Joint Select Committee on Deficit Reduction to include repealing the SGR in proposed legislation it must recommend to Congress by Nov. 23.

"With cuts of this magnitude pending, Congress should not wait until the 11th hour to take action," the groups wrote the committee. They said the committee "is the proper venue for the hard choices and honest budgeting needed to repeal the SGR and eliminate the shortfall in Medicare funding that grows worse each time Congress takes short-term actions to stop imminent cuts. And, with the 2011 calendar running out, no other pathway toward real SGR reform is evident."

They added that to "stabilize stressed physician practices, ensure that Medicare and TRICARE patients maintain their choice of physician, and take the fiscally responsible course, we are asking you to repeal the SGR now and enable the transition to payment and care delivery innovations that will promote high quality, well-coordinated, cost effective care."

Even CMS wants the SGR repealed. "This payment rate cut would have dire consequences that should not be allowed to happen," CMS Administrator Donald M. Berwick, MD, said when he released the 2012 fee schedule. "We need a permanent SGR fix to solve this problem once and for all." His boss, Health and Human Services Secretary Kathleen Sebelius, made similar comments.

An AMA analysis of the rule says the difference is due to reduced 2010 Medicare spending per enrollee, which CMS projected would increase 5.5 percent but actually grew 4.2 percent.

The AMA analysis also shows the following:

  • E-prescribing: Physicians must report e-prescribing 10 times during the first six months of 2012 and 2013 to avoid penalties in subsequent years. CMS adopted AMA-recommended  improvements to the program, including allowing use of a certified electronic health record to e-prescribe and making it easier to avoid the penalties by not requiring physicians to link the e-prescribing codes to qualifying visits and allowing physicians to apply for hardship exemptions online.
  • Physician Quality Reporting System: In response to AMA advocacy, CMS will provide interim feedback reports for physicians reporting individual measures and measure groups through claims-based reporting for 2012 and beyond. They will be based on claims for the first three months of each program year.
  • Lab test signatures: CMS retracted the requirement for physicians to sign lab requisitions, a policy change the AMA opposed. CMS reinstated its previous policy that physician signatures are not required on requisitions for Clinical Lab Fee Schedule services.
  • Annual wellness visit: CMS will increase the relative values for the codes to recognize additional resources associated with adding a health risk assessment to the service's requirements, but is continuing its policy of not covering a physical examination as part of these services.

Action, Nov. 15, 2011


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    Assume physicians have already trimmed overhead as much as possible.
    Assume the average office's overhead is 50%.
    The 27.4% reduction then translates to a 54.8% decrease in pay to the physician. Not acceptable.
    No other profession would consider taking ANY cut in pay.
    Stacked on top of increasingly expensive and unproven mandates (EHR, ePrescribing, ICD-10) and the lack of increases over the last 15 years to keep up with inflation, such a cut would clearly be the death knell for Medicare and/or the true private practice of medicine by legitimate physicians.
    It can't be allowed to happen.

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    No need to retract the SGR bill. Simply revise the regulations to (1) allow us to collect our usual fee at the time of service (abolishing the participating/non-participating divide) and (2) allow us to adjust the fee to the patient's ability to pay, negotiating said fee with our patient. CMS then pays whatever it can afford. This will reintroduce a free market and restore our constitutional right to behave as every other professional does.

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    A 27.4% cut in reimbursement is outrageously unacceptable. Perhaps CMS hopes to reduce costs because seniors can't find anyone to care for them.

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