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CMS Final Rule Trims Doctor Payments 10 Percent

By John Reichard, CQ HealthBeat Editor

November 2, 2007 -- Now it's up to Congress. The Centers for Medicare and Medicaid Services (CMS) has announced a final Medicare regulation that will trigger a 10 percent cut in payments to doctors Jan. 1 if lawmakers don't get their act together to stop it.

Most observers predict Congress will pass legislation blocking the scheduled cut, just as it did for each year dating back through 2003, when "negative updates" also were scheduled under Medicare's controversial physician payment formula. But with estimates of the cost of a two-year fix blocking scheduled 2008 and 2009 cuts ranging up to $20 billion or more, lawmakers are dragging their heels finding payment offsets.

CMS said in a news release late Thursday announcing the new rule that it would pay about $58.9 billion to about 900,000 doctors in 2008 under the regulation. But that includes the deep cut—10.1 percent to be exact—which CMS apologetically said it "has no choice but to implement." Actual outlays are likely to be considerably higher assuming Congress does act.

"Sixty percent of physicians say the cut will force them to limit the number of new Medicare patients they can treat," warned American Medical Association Board Chairman Edward Langston in a statement. "Congress must step in to replace the cut with payment increases that keep up with medical practice costs," he said. "The U.S. House has already acted, and now Medicare patients and the physicians who care for them are asking the Senate to take similar action."

But there's the rub. Legislative provisions approved by the House earlier this year would pay for a two-year fix by making deep cuts in payments to private health plans in Medicare, but that's a non-starter in the Senate. Senate Finance Committee members have met to try to assemble a package of cuts elsewhere in Medicare to pay for the physician payment fix, but have suggested that they may not be able to find offsets to pay for more than a one-year fix.

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