CMS Sends Letter to MedPAC Regarding 2007 Medicare Physician Fee Schedule

On April 7, CMS sent a letter to MedPAC confirming that a negative update of 4.6 percent is estimated for the 2007 Medicare physician fee schedule. CMS based this estimate on data currently available and reminds MedPAC that the estimate is subject to revision pending additional data.

In the letter, CMS attributes spending growth to several areas, including an increase in spending for: evaluation and management services; minor procedures including physical therapy, podiatry, and dermatology codes; and other procedures; imaging services, laboratory and other tests, and other services. Spending on SGR-related drugs decreased.

CMS supports MedPAC’s recommendation for developing measures regarding quality and efficiency of care. The letter notes that the current payment system does not provide payment to support physician efforts to combine services to render a more efficient episode of care. The letter also notes that as a result of the payment system, physicians may not invest in activities that could improve quality of care, such as electronic medical records and support programs for high-risk beneficiaries.

The letter states that a comprehensive set of performance measures is not yet available. CMS is developing plans focused on payment reforms to help achieve better quality and lower cost. The letter cautions against reforms providing inappropriate incentives.