MedPAC Discusses Medicare
Physician Payments
December 20, 2002 - As part of its Dec. 12-13 meeting,
the Medicare Payment Advisory Commission (MedPAC) discussed
several topics related to physician payments in preparation
for the Commission's March 2003 report to Congress. Commissioners
reviewed issues including payment adequacy and updating Medicare
payments for physician services; comparisons of Medicare and
private sector payment rates for physician services; and,
access to care for Medicare beneficiaries.
Although the vote on the recommendations will not occur until
January 2003, the commissioners discussed recommendation options
for the 2004 physician payment update. They appear to have
consensus on a recommendation for a 2.5 percent positive update
for 2004. This reflects a projected increase in input prices
of 3.4 percent less a 0.9 percent adjustment for productivity
improvements. The commissioners also noted that this would
have a budget impact of more than $1.5 billion. The commissioners
also agreed not to include a separate recommendation for changes
in the Sustainable Growth Rate (SGR) methodology since their
views were set forth in their March 2002 report to Congress.
The commissioners received a report from Chris Hogan of Direct
Research LLC, and Zach Dyckman of Dyckman and Associates LLC,
comparing Medicare payment rates for physician services to
physician payments in the private sector. Generally, Mr. Hogan
and Mr. Dyckman reported that the gap between Medicare and
the private sector continued to narrow in 2000 and 2001. Overall,
Medicare rates in 2002 were between 77 and 79 percent of private
sector rates, which Mr. Hogan and Mr. Dyckman noted is higher
than they were in 1994, in spite of the recent series of cuts.
At the same time, Mr. Hogan and Mr. Dyckman noted that reductions
in private payer payments were a large reason for the narrowing
in the gap.
The commissioners also received the most recent in a series
of reports on access to care for Medicare beneficiaries. Overall,
the report indicated that there are not widespread problems
with access to care for Medicare beneficiaries. However, ongoing
research suggests that in light of the recent updates, physicians
are "becoming somewhat more selective about patients
they accept into their practices." Preliminary evidence
indicated that beneficiaries in poor health, minorities, and
those without supplemental insurance have the greatest difficulty
in gaining access. The report recommended continued monitoring
of this issue in both the short term (as the affects of recent
updates become known) and in the long term (as the dual trends
of an aging population and a physician shortage become significant
factors).
In addition to these specific suggestions, the commissioners
also felt there were a number of areas that they should continue
to monitor. These included observing trends in PAR vs. non-PAR
physicians for evidence of shifts; continued monitoring of
behavioral shifts related to payment reductions; and, studies
of the number of physicians entering and exiting medicine.
Information:
Denise Dodero, Associate Vice President
AAMC Health Care Affairs
ddodero@aamc.org
(202) 828-0493
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