In a letter to U.S. senators and representatives, the AAFP and 122 other national and state medical organizations have called for adequate Medicare payment to physicians in 2006 and beyond.
The Oct. 3 letter tells federal lawmakers that failure to increase Medicare payments to physicians will undermine federal policy of making health care available to America's senior citizens and rural residents. It urges Congress to act on legislation that would avert a 4.4 percent cut in Medicare payments to physicians set to take effect Jan. 1, and to find ways to increase physician payment under Medicare.
The pending reduction stems from the sustainable growth rate formula used by CMS to calculate physician payment. Dubbed "the flawed SGR" by the medical community, the formula was enacted in the Balanced Budget Act of 1997. The medical community has repeatedly called for legislation that would replace the SGR with the Medicare Economic Index, which reflects the actual cost of providing medical care.
"If this cut is imposed, Medicare rates will fall 16 percent below the government's conservative measure of inflation in medical practice costs," the letter says. "If this cut occurs, the average physician payment rate will be less in 2006 than it was in 2001."
That does not bode well for America's Medicare patients. A February-March 2005 AMA survey found that 38 percent of respondents said they would decrease the number of new Medicare patients they would accept beginning in 2006 if the pending pay cut were to take effect. Others would reduce their outreach to patients: 24 percent said they would close satellite offices, and 34 percent of physicians who serve rural patients said they would discontinue rural outreach services.
More than half -- 54 percent -- said they would defer the purchase of information technology, touted by federal officials as a step toward improving quality of patient care and practice efficiency.
Such actions would be necessary because physicians have endured years of falling revenue, says the letter. Despite congressional action that averted steep Medicare cuts in 2003 through 2005, physicians received only modest increases for each of those years -- not enough to keep pace with physician practice cost increases.
"Although we are very grateful, even with these increases, physician payments fell further behind the MEI," the letter says. "Physician practice cost increases over these years were about two times the legislated payment increases."
Even if Congress were to freeze Medicare payments to physicians at 2005 levels, physicians would, in effect, experience a pay cut because inflation is projected to inflict a 2.7 percent increase in practice costs next year, according to the letter.
The medical organizations point out that virtually all other sectors of the health care community will receive significant pay increases next year. Home health providers will see a 2.5 percent increase, hospitals will get a 3.7 percent increase, Medicare Advantage's health maintenance and preferred provider insurance plans will get a 4.8 percent hike, and nursing homes will see a 3.1 percent increase in Medicare payments in 2006.
AAFP issued a Speak Out call to action Sept. 30, urging Academy members to contact their U.S. senators and representatives about Medicare payment. Members can log on to the site, submit their zip codes to view pages providing names of their U.S. senators and representatives and model letters that can be sent verbatim or modified to include additional member comments
