WASHINGTON – Unless Congress acts, the Centers for Medicare and Medicaid Services (CMS) plans a 21.2 percent Medicare pay cut for physicians beginning Jan. 1, 2010.

CMS has issued negative updates every year since 2002, using a mandated physician payment formula. J. James Rohack, MD, president of the American Medical Association, said the 2010 cut is expected to be the largest physicians have yet had to face, putting seniors’ access to care at risk.

“Short-term fixes have grown the problem,” Rohack said. “In four years the cost of a permanent solution ballooned from $49 billion to more than $200 billion and cuts increased from under 5 percent to a whopping 21.2 percent.”

The House is expected to consider legislation to permanently repeal the current Medicare physician payment formula, although at this point, physicians may not expect much besides a temporary fix.

Though the Senate voted against a bill this fall that would have frozen physician payments where they currently stand, House Speaker Nancy Pelosi (D-Calif.) said Congress wants to pass a permanent fix and she preferred that it be included as part of a healthcare reform package.

Along with physicians, hospital executives are not happy with what CMS has proposed to pay hospitals in 2010.
CMS plans to update acute care hospital payment rates by 2.1 percent for inflation, less an adjustment of 1.9 percentage points to remove the effect of increases in aggregate payments.

CMS also intends to update long-term care hospital rates by 2.4 percent for inflation, less an adjustment of 1.8 percentage points.

The proposed changes would apply to approximately 3,500 acute care hospitals paid under the Inpatient Prospective Payment System and 400 long-term care hospitals paid under the Long-Term Care Hospital Prospective Payment System, beginning with discharges occurring on or after Oct. 1, 2009.

“Hospitals cannot sustain additional cuts in an already exceptionally underfunded system,” said Tom Nickels, senior vice president of federal relations at the American Hospital Association. “The reductions go well beyond what is appropriate and fly in the face of data showing still-falling Medicare margins that are at an all-time low.”

In other 2010 Medicare payment updates, CMS announced a 2 percent market basket update to the home health prospective payment system (PPS). CMS will also cap outlier payments at 10 percent per HHA and will target total aggregate outlier payments at 2.5 percent of all home health PPS payments.

CMS has also issued a proposed rule to update payment rates and clarify the framework for Medicare patient selection and care in inpatient rehabilitation facilities during fiscal year 2010.