CMS final rule to slash Medicare payments by 27.4%

Unless Congress intervenes for an 11th time, physicians will incur a 27.4 percent reduction in Medicare payment rates Jan. 1, according to the Center for Medicare & Medicaid Services (CMS) final rule released yesterday. While lower-than-expected Medicare cost growth resulted in a slightly smaller cut than the 29.5 percent CMS estimated in March, the reduction is nonetheless massive.

"This payment rate cut would have dire consequences that should not be allowed to happen," CMS Administrator Dr. Donald M. Berwick said in a press release. "We need a permanent SGR fix to solve this problem once and for all."

The American Medical Association (AMA) released a similar statement decrying the cuts and repeating its call for a solution. "Payments for Medicare physician services have fallen so far below increases in medical practice costs that there is a 20 percent gap between Medicare payment updates and the cost of caring for seniors," AMA President Dr. Peter W. Carmel said. He continued, "The Joint Select Committee on Deficit Reduction must include repeal of the formula in their recommendation to Congress to protect access to care for seniors and stabilize the Medicare program."

Additional payment changes announced in the rule, subject to public comments until Jan. 31, 2012, include the following:

• Increases in payments for Medicare beneficiaries' Annual Wellness Visits to reflect the additional office staff time required to administer a health risk assessment in conjunction with the visit
  
• Continuation of CMS's "misvalued code initiative," focusing on codes billed by physicians in each specialty that result in the highest Medicare expenditures under the fee schedule
• Changes to the way CMS adjusts payment for geographic variation in the cost of practice
• Reduction in payment for a second advanced imaging service provided by the same physician on the same day
• Expansion of covered telehealth services, including smoking cessation

The final rule will appear in the Federal Register Nov. 28.

To learn more:
- read the press release from CMS
- see the statement from the AMA

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