CY 2006 Physician Payment Projected to Be -4.3 Percent

March 31, 2005 – The Centers for Medicare and Medicaid Services (CMS) informed the Medicare Payment Advisory Commission (MedPAC) that the update to the 2006 physician fee schedule is currently projected to be -4.3 percent. A 15 percent growth in expenditures for physician services occurred in 2004. Increases included: more frequent and more intensive follow-up visits, more frequent and complex imaging and laboratory tests and minor procedures (such as physical therapy and chemotherapy administration), and increased use of drugs in physicians' offices. Medicare Modernization Act (MMA) provisions, such as the 1.5 percent increase in the 2004 physician fee schedule update and the floor on the geographic price index, also contributed to spending growth. It was noted that Medicare Advantage payments are not included in the physician payment's sustainable growth rate (SGR) calculations, thus the 8.5 percent payment rate increase due to MMA provisions and Medicare Advantage enrollment increases did not contribute to the 2004 spending under the physician fee schedule.

Finally, CMS expressed support of MedPAC's recommendations for the development of measures related to the quality and efficiency of care by individual physicians and groups.