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Legislative Alert
Immediate action needed re Medicare 2002 Physician Fee Schedule
December 7, 2001
Courtesy of Richard Hellman, ATA Member and Chair, American Association of Clinical Endocrinologists (AACE) Legislative and Regulatory Committee
Contents:
On November 1st, the Center for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), released the Medicare program revisions to payment policies and physician fee schedule for the calendar year 2002. This policy, if instituted, will effect a 5.4% decrease across the board for all physician services. This reduction stems from a fatally flawed formula that penalizes physicians for economic downturns and from CMS data errors that have shortchanged physicians by $15 billion since 1988-89. This would be the fourth broad-scale reduction in physicians' and other practitioners' fees since 1992, and would bring the average increase in Medicare fees between 1991 and 2002 down to just 1.1% a year, or 13% less than the government's cost inflation.
AACE has worked with the American Medical Association (AMA) since November 1999 to urge the Department of Health and Human Services and HCFA (now CMS) to make necessary updates to the Medicare physician payment formula. Under the current system, physician payments are linked with the U.S. Gross Domestic Product (GDP) and utilization of health care services. Therefore, a declining economy directly affects physician payments. The process is also based on a 2% underestimation of the 1998 GDP. Because the formula for developing the fee schedule is cumulative, and these data were not corrected, the underestimation is compounded within each year's update.
Your assistance is urgently needed to help prevent this unwarranted and highly detrimental action by CMS. The Medicare Physician Payment Fairness Act of 2001 (S. 1660), sponsored by Senators James M. Jeffords (Vermont) and John B. Breaux (Louisiana), would lessen the magnitude of this reduction penalty in 2002 and would create an opportunity for Congress to make systemic changes in the physician update system next year. Specifically, the Act would reduce the reduction in the payment update for 2002 from -5.4% to -0.9%. Further, the bill would require that the Medicare Payment Advisory Commission (MedPAC) report no later than March 1, 2002 on replacing the flawed formula for determining the annual Medicare physician payment update.
Please contact your U.S. Representatives and Senators as soon as possible and encourage them to support S.1660. It is extremely important that you emphasize the effect a -5.4% decrease will have on patient care. Talking points and a sample letter are printed below to assist you with this effort. In light of recent events, AACE recommends that you either call your Representatives and Senators or submit all correspondence to Congress via fax or e-mail. [You can get contact information for the House of Representatives at (202) 225-3121 or http://clerk.house.gov/, and the Senate at (202) 224-3121 or http://www.senate.gov/contacting/index.cfm.]
AACE will continue to follow this matter closely. We request that you copy AACE on all communication with your Representatives and Senators. Thank you in advance for your assistance on this important issue.
Sincerely,
Richard Hellman, MD, FACP, FACE
Chair, AACE Legislative and Regulatory Committee
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Talking Points
About the 2002 Medicare Physician Fee Schedule
- Unless Congress takes immediate action by the end of December 2001,
updates in the 2002 Medicare Physician Fee Schedule will result in a
5.4% reduction for all physicians' services.
- I ask for your support for S.1660 to limit the reduction to -0.9%
until the current formula can be replaced with a simple, fair, accurate,
and predictable Medicare physician payment.
- Under the current system for calculating the physician fee schedule,
updates are based on the U.S. Gross Domestic Product (GDP) growth and
adjustments for previously estimated data. Therefore, the physician
fee schedule is directly affected by a decline in general utilization
of health care services and by economic activity that may not reflect
health care services costs.
- The entire health care sector will be affected by this decrease because
many third-party payors base their payment fee schedules on the Medicare
rates for reimbursement.
- This problem is compounded because of increases in the excessive administrative
burdens imposed on physicians by Medicare.
- Decreases in physician payments could limit patient access to care if more physicians choose not to accept new Medicare patients.
________________________________________________________________________
Sample Letter
About the 2002 Medicare Physician Fee Schedule
Please use the following letter as a model, but modify it to explain the impact of the fee schedule on your own practice and patients. Don't make your letter look like a form letter. Thank you again for your assistance on this important issue.
You can get contact information for the House of Representatives at (202) 225-3121 or http://clerk.house.gov/ and the Senate at (202) 224-3121 or http://www.senate.gov/contacting/index.cfm.
Dear Representative/Senator:Unless Congress acts by the end of December 2001, all Medicare payments to all physicians and other health care practitioners will fall by 5.4% on January 1. This significant across-the-board cut could make existing access problems for Medicare beneficiaries worse, particularly in rural communities. Consequently, the more than one million health care professionals represented by the undersigned organizations urge you to cosponsor The Medicare Physician Payment Fairness Act of 2001, which would trim the reduction in Medicare's 2002 physician conversion factor to 0.9% instead of 5.4%.
The 5.4% conversion factor cut recently announced by the Center for Medicare and Medicaid Services (CMS) stems from a fatally flawed formula that penalizes physicians for economic downturns and from CMS data errors that have shortchanged physicians by $15 billion since 1998 and 1999. This would be the fourth broad-scale reduction in physicians' and other practitioners' fees since 1992 and would bring the average increase in Medicare fees between 1991 and 2002 down to just 1.1% a year—or 13% less than the government's own estimate of practice cost inflation.
The Medicare Physician Payment Fairness Act of 2001 (S. 1660), sponsored by Senators James Jeffords and John Breaux, would lighten the penalty in 2002 and create an opportunity for Congress to make systemic changes in the physician update system next year. Specifically, the Act would reduce the current $38.26 conversion factor by 0.9% in 2002. In addition, it would ask the Medicare Payment Advisory Commission (MedPAC) to make further refinements in the Commission's earlier proposal to eliminate the expenditure target or Sustainable Growth Rate (SGR), which now helps determine annual updates in the conversion factor.
Over the last 10 years, physicians have been inundated with expensive new federal requirements. And the gap between payments and costs has already led to access problems for Medicare beneficiaries in Atlanta, Phoenix, Albuquerque, Annapolis, Denver, Austin, Spokane, northern California, and Idaho. Experience with Medicaid has shown the danger of unrealistic payment rates. Medicare is not immune from similar problems, as has been made abundantly clear by Medicare +Choice plans' continued exodus from the program despite a guaranteed payment increase of at least 2% a year. Some 85% of elderly and disabled Americans rely on fee-for-service Medicare, and for an increasing number there is no other option available. Please support the Medicare Physician Fairness Payment Act to ensure that our elderly and disabled patients can continue to receive the care they deserve and depend on.
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