Medicare payments to drop by 5.4% next year

Rule inflexibility cited

As the August issue of Physician’s Payment Update predicted, the anemic economy and increased use of Medicare by senior citizens will cause Medicare’s physician fee schedule to undergo a net cut in payments rather than the usual raise.

According to Center for Medicare and Medicaid Services (CMS) administrator Tom Scully, the conversion factor for the 2002 Medicare fee schedule is $36.19. This means that despite the fact that overall Medicare payments to physicians and nonphysician practitioners are predicted to increase by 1% next year, the conversion factor used to update payment rates for individual services will drop 5.4% below the 2001 level.

In contrast, the Englewood, CO-based Medical Group Management Association’s most recent cost survey reports that group operating costs are up by 6.2% over the past year.

"The law designing the physician update is incredibly prescriptive," said Scully. "The law gives us no flexibility in adjusting this . . . formula."

Physician organizations have complained for years that the formula used to calculate the conversion factor is flawed. Irked by this latest event, medical societies representing a wide range of specialties are joining forces in a campaign to lobby Congress to revise the conversion calculation.

Another change for next year is that nurse practitioners, clinical nurses, and physician assistants are covered to perform screening sigmoidoscopies, if allowed by state laws.

Also, Medicare will codify its existing policy that allows auxiliary personnel to provide services in a physician’s office incident to the supervising physician, no matter what the worker’s employment relationship with the physician is. That means qualified contract health workers can provide incident-to services, as can employees.