CMS proposes 4.6% physician pay cut for 2007.(NEWS)

In a not unexpected, but definitely unwelcome move, the Centers for Medicare and Medicaid Services has announced that it will cut physician pay by 4.6% for 2007.

The federal health program said the scheduled decrease in physician fees is based partly on the fact that spending for physician's services rose by 8.5% in 2005, with 7.5% of that rise due to growth in the volume and intensity of physician services.

However, physician organizations blame the hit on the sustainable growth rate (SGR).

If Medicare spending on physicians increases more than the SGR, CMS must cut physician fees; lower spending means higher rates for physicians.

But errors made in setting the SGR in 1998 and 1999 have led to annual proposed cutbacks and yearly congressional bailouts. Last year, for instance, medical organizations successfully lobbied Congress to block a proposed 4.4% cut for 2006, but because legislators did not increase fees, payments essentially were frozen at the 2005 rate.

This year, physician groups again say that they will urge Congress to stop the fee cut and repair the SGR.

Physician organizations said they will try to stop the cuts. Some also will continue to push for a system that would reward physicians with higher fees in exchange for more quality reporting, and tying physician fees to the Medicare Economic Index.