Medicare reform includes 2-year fee schedule fix: permanent solution still needed: prescription drug benefit to launch in 2006.(News)

WASHINGTON -- Physicians have 2 more years to lobby for a permanent legislative fix to Medicare's flawed reimbursement formula.

The historic $400 billion Medicare overhaul/prescription drug bill (H.R. 1) blocked a projected 4.5% cut to physician reimbursement in 2004 and provided payment increases of not less than 1.5% in 2004 and 2005.

The bill, approved by both houses of Congress in late November, was awaiting the president's signature at press time.

The legislation "buys us 2 years to try to get a permanent fix enacted," Bob Doherty, senior vice president for governmental affairs and public policy at the American College of Physicians, told this newspaper. It does not actually correct the flaw in the fee schedule's formula, which cuts payments whenever the costs of Medicare services exceed growth in the economy.

In a letter to Senate Majority Leader Bill Frist (R-Tenn.), the American College of Obstetricians and Gynecologists encouraged Congress to find a longterm solution to the Medicare payment formula, to ensure stable payments in the future.

"ACOG understands that budgetary constraints only allow for a short-term fix to the flawed physician payment issue," ACOG Executive Vice President Dr. Ralph Hale wrote. "However, we remain deeply concerned about the deep cuts in payments slated after 2006."

It is more likely, however, that nothing will be done until 2005, as "Congress won't want to take up Medicare next year," Mr. Doherty predicted. Physician groups will continue to press the Centers for Medicare and Medicaid Services to remove Medicare-covered outpatient drugs from the Sustainable Growth Rate, a component of the physician fee formula. The American Medical Association estimates that eliminating these drugs from the formula could add $25 billion to $80 billion to expenditures for physician services over the next 10 years.