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Physicians' Medicare Payments May be Cut 29.4%

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A Congress Budget Office report showed physicians' Medicare payment rates may decrease by 29.4 percent in January, according to an AHA News Now report.

Last year Congress delayed a 25 percent cut in Medicare payments for physicians until 2012. Congress' overrides of the sustainable growth rate mechanism, which called for reductions in the physician fee schedule each year since 2003, caused this new, higher estimate of cuts.  

The report discusses several options for Medicare payments to physicians, including a combination of the "clawback," "cliff" and freeze methods. The clawback approach makes a short-term adjustment in payment rates and overrides the SGR mechanism; after a period of time, the SGR would "claw back" the excess spending caused by freezing rates. The cliff method also makes a short-term adjustment in payment rates but overrides a provision of the law that would cap reduction at Medicare Economic Index minus 7 percent in the year after the adjustment. The year after the override expires, payment rate reductions would be determined through SGR, but would not be limited to 7 percent in any given year.

One option the CBO explores would mandate a one-year freeze of payment rates followed by a cliff policy. The second option is a clawback policy that would freeze payment rates in 2012 and use the SGR mechanism to recapture spending over the following several years. Option three would institute a 10-year freeze of payment rates at 2011 levels.

Read the AHA News Now report on Medicare payment.

Read the Congress Budget Office report on physicians' Medicare payments.

Related Articles on Physician Compensation:

Physicians Report Mixed Movement in Compensation in 2010

Physician Leadership Incentive Compensation Plans

Physicians Still Paid for Volume, Not Quality, Survey Finds


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