AAFP Statement: Medicare Reimbursements Cut

Statement attributable to:
Michael O. Fleming, M.D.
President, AAFP

“Yesterday, the Centers for Medicare & Medicaid Services said Medicare reimbursements to physicians for the care they provide to Medicare patients will be cut 4.5 percent, effective January 1, 2004. Unless Congress acts, this decrease threatens to reduce the ability of millions of seniors to get the basic health care they need.

“The problem is that payments for medical services for Medicare patients are tied to the state of the national economy, which, as we all know, has been struggling to regain momentum. But medical needs of patients do not rise and fall with the Gross Domestic Product (GDP). In fact, the rate of increase in Medicare payments to physicians – an average of just 1.1 percent a year over the past twelve years – is 13 percent lower than the government’s own estimate of practice cost inflation. It is a big part of the reason seniors are finding it increasingly hard to find physicians who can take new Medicare patients – many family physicians can no longer afford to take them.

“It is simple economics – doctors, inadequately reimbursed by the Medicare system, struggle to keep their doors open, especially family physicians who work in rural and urban underserved areas. Often a family physician is the only doctor in an area willing to take Medicare patients. Some have already been forced to make tough choices, such as limiting the number of new Medicare patients they can take in order to be able to continue to provide services to the patients they are already seeing.

“This will be the second time in the past three years that Medicare has cut payment rates to physicians. It would have been three out of three if Congress hadn’t stepped in this year and passed a bill providing a modest 1.6 percent increase for 2003. If the Medicare program continues to use the dysfunctional formula to determine payment rates as mandated by Congress, reimbursements in 2005 will be lower than they were in 1991.

“When doctors cannot afford to take patients because Medicare does not cover the necessary costs of providing health care, everyone suffers. When reimbursement rates are subject to dramatic changes every year as they are now, the health-care system becomes unstable and unreliable for our seniors. Insecurity is the last thing that seniors need when it comes to health care.

“The solution is clear – Congress needs to intervene again to either reform or waive the dysfunctional Medicare reimbursement formula. This needs to be done before adjournment, so that seniors will not face further reductions in medical services in the year ahead. The Medicare reform package passed by the U.S. House of Representatives includes a much-needed reprieve from the flawed physician reimbursement formula – temporary but one that would give all of us time to work out a new more realistic formula. If Congress fails to pass a Medicare bill, containing that provision, it will threaten the availability of vital medical services to many senior citizens.