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National Legislative Activities

Medicare Physician Payment Reform

Both houses of Congress recently passed budget legislation that will freeze Medicare physician payments at the 2005 level. This action will reverse the physician payment cut of 4.4% that went into effect on January 1, 2006.

Although these most recent cuts have been reversed, the Medicare physician payment system need to be truly reformed. If not, Medicare payment rates in 2014 will be little more than half what they were in 1991, after adjusting for practice cost inflation. Medicare payments are already lagging behind increases in practice costs.

Physician payment updates are driven by a flawed formula called the Sustainable Growth Rate, or SGR. Instead of the SGR, payment updates should be based on increases in practice costs.

Other Medicare providers are not subject to the SGR. In fact, hospital payments are slated to rise by more than 3% a year.

Results of a recent American Medical Association Member Connect Survey indicate that Medicare payment cuts to physicians will hurt access to care for America's seniors. The results show that 38 percent of physicians will decrease the number of new Medicare patients they accept due to Medicare payment cuts.