Physician Fee Cuts Also a Possibility

October 1, 2001

As if the prospective Medicare cuts in payments for outpatient chemotherapy drugs were not troubling enough, there is another dark Medicare cloud. The American Medical Association (AMA) is predicting that Medicare may also cut physician

As if the prospective Medicare cuts in payments for outpatient chemotherapydrugs were not troubling enough, there is another dark Medicare cloud. TheAmerican Medical Association (AMA) is predicting that Medicare may also cutphysician fees across the board in 2002. A decision on that will not be madeuntil November, when the CMS presents final numbers for the Medicare EconomicIndex (MEI), an inflation adjustment, and the Sustainable Growth Rate (SGR),which describes how much under or over a preset target physicians’ bills toMedicare were in a given year. 

If physicians keep their billing below theincrease in the gross domestic product, then the MEI is increased, leading to ahigher fee "update." In the opposite scenario, the MEI is decreased.Based on preliminary forecasts, the AMA believes that physician fees could becut 2% to 3% in 2002. (That would be after increases of 5.4% and 4.5% in 2000and 2001.) The AMA is trying to get the CMS to make some administrative changesin the way the MEI and SGR are calculated—changes that perhaps would result ina zero change in 2002. But in a letter to medical specialty societies, RobertGilmore, MD, an AMA official, said, "I cannot overemphasize how difficultthis battle could be."