Medicare to Retroactively Restore 4.4 Percent Pay Cut

Family physicians will recoup money lost as a result of the 4.4 percent Medicare pay cut that went into effect Jan. 1, thanks to final passage of the Deficit Reduction Act of 2005. Once signed by President Bush, the new law would freeze Medicare physician payments at 2005 levels. Its provisions are retroactive to the first of this year.

CMS has announced it will automatically adjust physician payment and send participating physicians a lump sum check by July 1.

"We're happy that Congress has fulfilled its responsibilities to physicians and patients by restoring the 4.4 percent cut," said AAFP President Larry Fields, M.D., of Ashland, Ky., "We applaud CMS for agreeing to retroactively restore our payments.

"But we cannot go on year after year with this battle. We can't be satisfied with breaking even or a small percent increase each year. Congress needs to fulfill its obligation to fix this problem so that our patients have access to quality care. Until Congress acts, they are putting their constituents and our patients at risk."

Fields' call echoes that in the reconciliation bill, which calls on the Medicare Payment Advisory Commission to "submit a report by March 1, 2007, on mechanisms that could be used to replace the sustainable growth rate system," according to the Congressional Research Service report, "Side-by-Side Comparison of Medicare, Medicaid, and SCHIP Provision in the Deficit Reduction Act of 2005," (PDF file: 121 pages / 480 KB. More about PDFs.) published Jan. 30.

In the past, MedPAC has consistently called for replacing the current formula, which uses the SGR, with the Medicare economic index. Doing so would more accurately reflect physicians' cost of business and avoid the annual reductions in Medicare physician payment now mandated under the SGR formula.

AMA has published a Q-and-A sheet (PDF file: 2 pages / 67.6 KB. More about PDFs.) that addresses questions physicians may have about billing Medicare. The sheet explains that CMS has instructed carriers to make automatic adjustments.

Physicians who declined to participate in Medicare in 2006 now will have 45 days to change their participation status. The change will be retroactive to Jan. 1, and claims will be adjusted to reflect the status change.

Family physicians can re-enroll as Medicare participating physicians by contacting their regional CMS office listed on CMS' Regional Office Overview Web resource.