Physicians see 4.4% cut in fees

December 1, 2005

Washington, DC—Physicians nationwide, including ophthalmologists, will endure a 4.4% reduction in reimbursements effective Jan. 1 in light of the Centers for Medicare and Medicaid Services' (CMS) newly released 2006 Physician Fee Schedule.

Washington, DC-Physicians nationwide, including ophthalmologists, will endure a 4.4% reduction in reimbursements effective Jan. 1 in light of the Centers for Medicare and Medicaid Services' (CMS) newly released 2006 Physician Fee Schedule.

The across-the-board decrease, announced Nov. 1, is based on what many medical advocacy groups-including the American Academy of Ophthalmology (AAO) and the American Society of Cataract and Refractive Surgery (ASCRS) -believe is a flawed system for determining how much physicians should be paid for their services.

The conversion factor was reduced from $37.8975 in 2005 to $36.1770 in 2006.

William Rich III, MD, the AAO's medical director of health policy, said last-ditch efforts are being made to try to secure another freeze. However, "the possibility of a legislative fix does not look good at this time," he said.

Faulty formula

In an attempt to control Medicare spending, CMS relies on the Sustainable Growth Rate (SGR), which was linked to the gross domestic product.

"If the growth in the rate of service per beneficiary exceeds the growth in domestic product, you get slammed, because the assumption is made that growth of service per beneficiary should not exceed growth in domestic product," Dr. Rich explained.

However, medical specialty groups argue the cost of providing patient services has little to do with the economy and more to do with the availability of new technology and treatment options.

The crux of the problem, according to DeChane Dorsey, the AAO's director of health policy, is that the SGR includes the cost of drugs as part of a physician's fee. When drug costs rise, the formula shows that physician's fees are rising.

"The SGR has, in effect, been adjusting the conversion factor further downward because it includes prescription drugs, and prescription drugs have been in no way allocated for in the (payment formula)," Dorsey said. "It makes it appear the spending and volume growth is way, way beyond where it should be. The SGR is the wrong place to be taking care of the issues caused by that spending."

The AAO has been working with the American Medical Association and a host of other organizations to lobby for changes in the formula. If drugs are not removed from the formula, Dorsey said, all physician fees would be cut about 24%, beginning next year and running through 2012.

Dr. Rich said it would cost $110 billion to get rid of all of those prospective cuts.

"Frankly, the money wasn't there," he said.

Physicians in other specialties are threatening to reduce the number of Medicare patients they see, but that is simply not an option for ophthalmologists, who mostly serve elderly, Medicare-eligible patients. Last year, ophthalmologists received $4.4 billion from Medicare, making them the fourth-highest group of doctors receiving reimbursements and the highest specialty-after general medicine, cardiology, and family practice, Dr. Rich said.

Some good news

Meanwhile, the new fee schedule also offered some positive news for ophthalmologists. Beginning in January, Medicare will expand its "high-risk" category and cover glaucoma screenings for Hispanic Americans age 65 and older.