Legislation to Increase Physician Payments on Horizon

Two members of the Senate Finance Committee have announced that they are working on legislation to address payment issues for primary care physicians. Sen. Max Baucus, D-Mont., chair of the Senate Finance Committee, is expected to introduce legislation in the next several weeks that will increase Medicare payments for primary care physicians, and Sen. Charles Grassley, R-Iowa, has introduced legislation to resolve inequities in physician funding formulas that penalize physicians practicing in rural areas.

During an April meeting with the AAFP and other medical specialty organizations, Baucus said the Senate Finance Committee plans to introduce an 18-month Medicare physician payment update bill that will provide a flat physician payment level for the last six months of 2008 and a 1.1 percent increase in 2009. If approved, the bill would block a 10.6 percent payment reduction that is scheduled to take effect on July 1 and a 5.4 percent cut that will occur in 2009.

The proposal would give Congress time to develop an alternative to the sustainable growth rate, which has triggered steep reductions in Medicare payment rates during the past several years. The Senate Finance Committee would like to bring the bill to the floor of the Senate by mid-May, Baucus said at the April meeting.

"It is encouraging that the Senate is trying to get something done before Memorial Day, and that the goal is an 18-month update," said Kevin Burke, director of the AAFP Division of Government Relations, who attended the meeting.

In the meantime, Grassley, the committee's ranking Republican member, has introduced the Medicare Rural Health Access Improvement Act of 2008, which seeks to reduce Medicare physician payment disparities between rural and urban areas that result from use of the Geographic Practice Cost Indices, or GPCIs.

"The existing geographic adjusters result in significant disparities in physician reimbursement which penalize, rather than equalize, physician payment in Iowa and other rural states," said Grassley in a prepared statement (7-page PDF; About PDFs) introducing the bill.

"Iowa is widely recognized as providing some of the highest-quality health care in the country, yet Iowa physicians receive some of the lowest Medicare (payments) due to these inequitable geographic adjustments," said Grassley, "Medicare (payment) for some procedures is at least 30 percent lower in Iowa than payment for those very procedures in other parts of the country."

Grassley's bill would make changes in the GPCI formulas for work and practice expense and would revise GPCI calculations "to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs," said Grassley.

In addition, the proposal would extend through 2009 the 5 percent bonus payment to physicians practicing in physician scarcity areas.