Medicare physician payment rates are set annually based on a statutory formula. That formula adjusts the Medicare Economic Index based on how actual medical expenditures compare to a target rate—the SGR. The SGR is based in part on medical inflation, the projected growth in the domestic economy, and projected changes in the number of Medicare beneficiaries.
While there has been legislation introduced in Congress this year aimed at changing the formula that calculates physician payments under Medicare, a permanent fix to the payment problem is unlikely this year, said Dr. Larry Fields, president of the American Academy of Family Physicians.
The AAFP is pushing for a positive update of between 2% and 5% for 2007 and real engagement to permanently fix the problem next year, he said. Officials at the AAFP have commissioned a health care consulting firm, the Lewin Group, to examine alternative payment mechanisms that would not involve the use of the SGR formula, he said. They hope to use that information to work with Congress on a permanent solution next year, Dr. Fields said.
In addition to the 5.1% payment cut, the CMS proposal also seeks to expand coverage for some preventive services. For example, the proposed rule would implement the provisions of the DRA that call for making abdominal aortic aneurysm screening a Medicare-covered preventive service. The benefit would include a one-time ultrasound screening for beneficiaries who seek the “Welcome to Medicare” physical, along with education, counseling, and referral services.
The CMS proposed rule would also implement other provisions of the DRA which call for exempting colorectal cancer screening from the Part B Medicare deductible.