CMS final rule announces a 21.2% Medicare physician payment cut for 2010

A final ruling by the Centers for Medicare and Medicaid Services calls for a 21.2% Medicare physician payment cut and includes refinements that will increase payment rates for primary care services.

Although original estimates projected that Medicare physicians would face a 21.5% drop in reimbursement, the new negative payment update reflects more recent data.

"ASCRS, along with the medical and surgical community, continues to work with Congress, including key House and Senate committees with jurisdiction over the Medicare program, to address the –21.2% cut as part of their legislative efforts on health care reform," according to a press release from the American Society of Cataract and Refractive Surgery. "There can be no meaningful health care reform without long-term reforms to the Medicare physician payment system, which is based on the flawed [sustainable growth rate] formula."

"The Administration tried to avert the pending fee schedule cut in the FY 2010 budget proposal that it submitted to Congress, and remains committed to repealing the SGR," Jonathan Blum, director of the CMS Center for Medicare Management, said in a CMS press release.

"In the meantime, the CMS is finalizing its proposal to remove physician-administered drugs from the definition of 'physicians' services' for purposes of computing the physician fee schedule update. While this decision will not affect payments for services during CY 2010, the CMS projects it will have a positive effect on future payment updates," he said.

American Medical Association President J. James Rohack, MD, said the cuts would limit access to care for seniors.

"Medicare's final 2010 payment rule confirms that in 60 days physicians face steep cuts of 21.2% — the largest payment cut since Congress adopted the fatally flawed Medicare physician payment formula," Dr. Rohack said in an AMA press release. "Access to care and choice of physician for seniors, baby boomers and military families is at serious risk — and Congress must fix the payment formula once and for all this year."

While he called for a repeal of the payment formula, he also supported the rule's removal of physician-administered drugs from the formula.

"This is a long overdue step on the road to permanent reform, as it significantly lowers the cost of fixing the formula once and for all," Dr. Rohack said. "The AMA called for this action and thanks the Obama administration for its recognition that physician-administered drugs do not belong in the payment formula."

According to the CMS release, the rule also includes changes in the payment rates for primary care services.

While the CMS had proposed to use information about physician practice costs from the Physician Practice Information Survey (PPIS), the agency will now phase in the information during a 4-year period.

"In the final rule-with-comment period, the CMS is adopting two significant modifications to its proposal to increase the equipment utilization percentage that is assumed for purposes of setting [practice expense relative value units]," the CMS release read. "The CMS will increase the equipment utilization rate assumption used to determine the practice expense for expensive equipment priced over $1 million dollars from 50% to 90%, but will phase in this change over a 4-year period. The CMS also will not apply this change to expensive therapeutic equipment."

Several changes in the final rule could mean a slight payment increase for some physicians.

"Taking all changes in the final rule-with-comment period into account, the CMS projects that payments to general practitioners, family physicians, internists and geriatric specialists will increase by between 5% and 8%, prior to application of the negative update required by the SGR," according to the release.

Other provisions in the rule make changes to the Physician Quality Reporting Initiative and the Electronic Prescribing Incentive Program. These changes include providing participants with more reporting options and implementing a new method for practices to be considered successful e-prescribers.