Medicare holds down physician pay

Compensation increased at a comparatively small rate from 2000 to 2001 for both primary care physicians and specialists, according to the Medical Group Management Association. The rate of increase for all primary care was only 1.2 percent — about half the previous year’s change, and one third of the 3.4 percent increase in 1998-99. The main culprit is falling reimbursement rates for Medicare, according to William Jessee, MD, the MGMA’s chief executive officer, who warns that compensation gains may disappear altogether this year due to a 5.4 percent Medicare reimbursement cut. He notes that while the Centers for Medicare and Medicaid Services plans to implement “MGMA-supported administrative adjustments” in 2003 to improve the measurement of physician productivity under Medicare, the agency needs to take additional administrative steps to address the additional 4.4 percent Medicare fee reduction projected next year.

“Physician group practices continue to serve a growing population of older Americans, despite the fact that annual Medicare reimbursement increases have lagged behind actual practice costs by an average of 2.7 percent each year for the last decade,” Jessee says. “In the long run, this situation is financially unsustainable.” MGMA proposals include the removal of Medicare-covered drugs from the definition of “physician services” and having CMS correct Medicare enrollment projection errors that have compounded the current payment shortfall.

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