The Centers for Medicare and Medicaid Services on Friday reluctantly issued a final rule on Medicare physician payment rates for 2003 that includes a 4.4% cut in the physician fee conversion factor. CMS officials said they were forced to implement the cut because Congress failed to change the method by which the conversion factor is calculated.
The physician conversion factor is a major component in determining the rates that Medicare pays for over 7,000 healthcare procedures. The factor is the product of a complex formula, specified in Medicare law, that converts relative value units (RVUs) into payment amounts based on factors such as the U.S. gross domestic product (GDP).
CMS acknowledges that the conversion-factor formula is based on a flawed methodology, but the agency claims that only Congress has the authority to change the formula. Legislation to that effect failed when both houses adjourned in November without enacting a proposed bill that would have fixed the formula.
"In the rule we are announcing today, CMS has done everything it can to shore up physician payments for 2003, but only Congress has the authority to fix the formula," said CMS administrator Tom Scully. The 4.4% cut is a slight improvement on the 5.1% cut that CMS originally proposed, and is the result of refinements that CMS made to the rate of inflation in providing physicians’ services.
CMS said that the lower Medicare rates could prompt some physicians to refuse new Medicare patients, or not accept Medicare rates as full payment. The agency said it would monitor beneficiary access to healthcare services to assess the impact of the cut.
The final rule will be published in the December 31 Federal Register, and will be effective March 1, 2003. Services provided in January and February will be paid under the 2002 schedule.
By AuntMinnie.com staff writersDecember 23, 2002
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