November 16, 2001

Jeffords, Breaux Introduce Legislation to Reduce Cuts to Medicare Physician Payments

Senators James Jeffords (I-Vt.) and John Breaux (D-La.) Nov. 8 introduced legislation that would reduce the recently announced dramatic reduction in the Medicare conversion factor for physician payments. In its Nov. 1 final rule [66 Federal Register 55245], CMS indicated that the conversion factor would be cut by 5.4 percent in 2002 [see Washington Highlights, Nov. 2].

The new Jeffords/Breaux bill, the "Medicare Physician Payment Fairness Act of 2001" (S.1660), would set the 2002 conversion factor reduction at -0.9 percent. According to a summary of the legislation, the 0.9 percent reduction represents what the update would be if the gross domestic product (GDP) and a historical data error were eliminated from the sustainable growth rate (SGR) spending target for 2002. In its March 2001 report to Congress, MedPAC had identified similar flaws in the SGR and recommended replacing it with an update system that better reflects the costs of caring for Medicare patients.

S.1660 would also direct MedPAC to conduct a study on eliminating the SGR and developing a new factor to determine physician payment updates. MedPAC would report findings and recommendations to Congress no later than March 1, 2002.

The AAMC strongly supports the Jeffords/Breaux legislation (S.1660) for providing both immediate and long-term relief from a flawed payment update formula.

Information: Chris Mitchell, AAMC Office of Governmental Relations, 202-828-0526.