Medicare’s proposed fee-schedule changes for calendar year 2003 would result in a 3% cut in average payments to oncologists. That reduction is due to an expected 4.4% negative "update" to all physician fees in 2003. The total relative value of the CPT codes used most often by oncologists will actually go up 1% in 2003 because of some positive changes Medicare wants to make in the "practice expense" portion of the relative value formula. However, that increase will not be nearly enough to offset the negative 4.4% update. The negative update could have been worse had Medicare not proposed to change the way it figures a "productivity" element in the Medicare Economic Index (MEI). A measure of inflation in physician inputs, the MEI is itself one of the determinants of the annual Medicare fee updatethe higher the MEI, the higher the annual update, or the lower the decrease. The change being proposed by the Centers for Medicare & Medicaid Services raises the estimated 2003 MEI update from 2.3% to 3.0%. Without the productivity change, the update would have been a negative 5.1%. These figures are all preliminary. They will be finalized when Medicare releases a final 2003 fee schedule, probably in late October.