Severe Medicare Payment Cut Scheduled for 2013

In the absence of congressional action, an across-the-board cut of 26.5 percent in payment for physician services under Medicare will go into effect on January 1, according to a final rule issued last month by the Centers for Medicare and Medicaid Services (CMS).

An additional 2 percent could be shaved from physician pay if “sequestration” goes into effect; the latter refers to severe austerity measures mandated by this summer’s budget agreement—tax hikes and sharp cuts in government spending—that would be imposed if Congress and the administration fail to reach a deficit reduction agreement.

In comments submitted in September to CMS Acting Administrator Marilyn Tavenner in response to the proposed rule, APA Medical Director James H. Scully Jr., M.D., wrote that the payment formula needed to be permanently fixed.

“We know that it is the responsibility of Congress, and not CMS, to institute a permanent fix,” Scully wrote. “We strongly urge Congress to legislate a permanent fix to the SGR [the sustainable growth rate component of the formula that requires increases in volume to be compensated for by decreases in payment]. Annually diminished Medicare Part B payment rates, coupled with uncertainty about how steep declines in Medicare physician payment rates will be, deter an increasing number of physicians from accepting Medicare beneficiaries and consequently reduce beneficiaries’ access to health care.”

Scully also expressed concern about aspects of the government’s move toward alternative payment mechanisms, its authorization of payment to nonphysicians for certain somatic services, and its use of a Web site to provide public information about physicians who participate in government quality-reporting programs (Psychiatric News, October 5).

A number of those concerns have been addressed in the final rule, and at press time APA was reviewing the rule and preparing a response to CMS. Meanwhile the status of physician payment under Medicare generally remains dependent on congressional action.

Psychiatric News will provide complete coverage of APA’s response to the rule, as well as the effects of any congressional action, in a future issue. ■

The Medicare fee final rule is posted at http://www.gpo.gov/fdsys/pkg/FR-2012-11-16/pdf/2012-26900.pdf.