Congress freezes 5% Medicare cut

January 1, 2007
Jennifer A. Webb

Despite a last-minute vote by Congress that staved off a 5% reduction to Medicare payment rates, ophthalmologists still will experience a 3% pay cut this year due to changes made to work relative value units and practice expense calculations.

Despite a last-minute vote by Congress that staved off a 5% reduction to Medicare payment rates, ophthalmologists still will experience a 3% pay cut this year due to changes made to work relative value units and practice expense calculations.

Just hours before ending its last session of 2006, members of the House and Senate voted Dec. 9 to freeze Medicare payment rates for the second year, meaning physicians will be paid at 2005 rates. The conversion factor for 2007 will remain at $37.8975.

Advocates say they are glad to have halted the cut, but the freeze does not address a planned 10% cut to the conversion rate scheduled for 2008.

In addition to the freeze on the conversion factor, Congress voted to institute a voluntary pay-for-reporting scheme in which physicians can earn a 1.5% bonus for following various steps with their patients. Those steps are outlined in a list of "quality measures," each of which carries a separate code that must be entered and reported to the Centers for Medicare and Medicaid Services (CMS) (See related article).

Still of concern

The 1.5% bonus, to be paid in a lump sum in 2008, might not be enough to cover the extra staff time required, warned Nancey McCann, director of government relations for the American Society of Cataract and Refractive Surgery. The bill allows the secretary of the Department of Health and Human Services to change those measures without any public comment or recourse, she said.

"While we appreciate that Congress prevented the 5% reduction, you're looking at a 10% [reduction] next year, with quality reporting in which you won't get paid until 2008, where the secretary seems to have total authority and control," she said. "Those are issues we're concerned about at a time when they're not getting a cost-of-living increase, and they haven't gotten one in 5 years."

Physicians received a 1.5% increase to the conversion factor in 2004 and 2005, a 1.6% increase in 2003, and a 5.4% cut in 2002, she said.

Practice expenses

In the meantime, CMS has said it will work with the American Medical Association to survey all physician specialties beginning this year to determine current practice expenses. Although it will take a few years for the data to be gathered and analyzed, Cohen said ophthalmology should regain its position at the top of the list of specialties with the highest practice expenses once the survey is complete. With that information, CMS should compensate practices accordingly, instead of cutting ophthalmology by 1% each year for 4 years as it had planned.

"We're on our way to fixing this," Cohen said.

Advocates had hoped that, if Congress wanted to help physicians, it would put the money into a positive update to the conversion factor instead of the pay-for-reporting program, Cohen said.

"We were arguing to the end for at least a 1% update," she said, but added, "Doctors are relieved we didn't get the cut."

William L. Rich III, MD, AAO's medical director of health policy and an ophthalmologist in private practice in northern Virginia, said he hopes the Democrats who now control Congress will be more sympathetic to physicians than the Bush administration has been. President Bush favors Medicare HMO plans and was driving out physicians in fee-for-service plans, he said.

"They're strongly, strongly going to prefer fee-for-service, so our interests are aligned there," Dr. Rich said of Democratic legislators. "They'll not do anything to hurt physicians to drive them into Medicare HMOs, but that's not their top priority.