Drastic Medicare Fee Cuts Coming

The failure of the Joint Select Committee on Deficit Reduction to agree on budget cuts means congressional action is the only thing that can stop Medicare from cutting physician payments by 27.4 percent on Jan. 1. Congress must act, or the Sustainable Growth Rate (SGR) formula mandates that the cuts automatically take effect. Texas Medical Association and American Medical Association officials will conduct a conference call on Dec. 5 to plan strategy to persuade Congress to stop the cuts.

In addition to the large conversion factor cuts and various changes in the relative value units or other payment rules, Texas physicians will see changes attributable to revisions in the geographic price cost indices (GPCIs) adjustors.  The average effect by payment locality is:   

 

Average Effect of GPCIs

Locality

2011

2012

Change

Austin

0.992

0.986

-0.6%

Beaumont

0.978

0.933

-4.6%

Brazoria

0.996

0.995

-0.1%

Dallas

1.004

1.005

0.1%

Fort Worth

0.991

0.982

-0.9%

Galveston

0.997

1.002

0.5%

Houston

1.008

1.002

-0.6%

Rest of Texas

0.973

0.94

-3.4%

The changes are primarily due to continuing phase-in of lower liability adjustors resulting from Texas' improved tort climate and the expiration of a temporary floor on the geographic adjustments of the work component.  In recent years, Congress has reenacted the work GPCI floor at the same time it acted to override the fee schedule cuts. It is not known what action, if any, Congress will take this year.  

AMA President Peter Carmel, MD, said the deficit committee's failure "forces our nation to continue on an unsustainable path that puts current and future generations of Americans at risk for harsh consequences. Congress set up processes and procedures that could have charted a course to put our nation's fiscal house in order. The stalemate in the deficit committee will trigger robotic, across-the-board spending cuts, which will not address critical structural problems in the federal budget." To compound matters, the committee's inability to trim $1.2 trillion in federal spending means physicians will face an additional 2-percent cut to their Medicare payments beginning in 2013.

TMA, AMA, other state medical societies, and national specialty societies urged the committee to include repealing the SGR if it recommended any proposed deficit-reduction legislation to Congress. However, the committee could not agree on proposals, leaving the Medicare fee issue up to Congress, which has intervened at the last minute to avert payment reductions in each of the last 12 years.

Even CMS wants the SGR repealed. "This payment rate cut would have dire consequences that should not be allowed to happen," then-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."


Action, Dec. 2, 2011


Comment on this (Must be logged in to comment)

Add Comment

Text Only 2000 character limit

Looking for more?