Feds' proposal would cut Medicare payments to physicians

September 6, 2005

Washington -- In a move that comes as a surprise to few in the medical community, the federal government has proposed reducing Medicare payments to doctors by about 4.3 percent in 2006.

Washington -- In a move that comes as a surprise to few in the medical community, the federal government has proposed reducing Medicare payments to doctors by about 4.3 percent in 2006.

The reduction reportedly is mandated by a formula that calculates substantial growth in Medicare spending and the extent to which it rises above estimates -- which it has over the past few years. The law then requires the Centers for Medicare and Medicaid Services (CMS) to adjust payments downward for more than 7,000 health care procedures and services.

Doctors appear to have anticipated the proposed reduction. In an August press conference, the American Medical Association (AMA) said that many doctors would quit seeing Medicare patients if the 4.3 percent reduction were to be implemented. An AMA official said nearly 40 percent of physicians report that if the reduction goes into effect, they will be forced to decrease the number of new Medicare patients they'd be able to accept. The AMA official added that the proposed reduction is "the tip of the iceberg," and that more cuts would occur over the five years following 2006.

The CMS said it will accept public comments on the proposed 2006 reduction until Sept. 30 and will publish a final ruling in November.