WASHINGTON – The Centers for Medicare and Medicaid Services announced on Oct. 30 a 21.2 percent 2010 pay cut for physicians participating in Medicare.

CMS officials said they had anticipated a 21.5 percent pay cut for physicians in 2010, but new data allowed them to lower the cut to 21.2 percent.

"The administration tried to avert the pending fee schedule cut in the FY 2010 budget proposal that it submitted to Congress, and remains committed to repealing the sustainable growth rate," said Jonathan Blum, director of the CMS' Center for Medicare Management.

In the meantime, CMS officials are preparing a proposal to remove physician-administered drugs from the definition of 'physicians' services' for purposes of computing the physician fee schedule update. While this decision will not affect payments for services during CY 2010, CMS projects it will have a positive effect on future payment updates, Blum said.

CMS is also adopting several refinements to Medicare payments to physicians that are expected to improve payment rates for primary care services relative to other services, Blum said.

J. James Rohack, MD, president of the American Medical Association, said the pay cut is the largest that physicians participating in Medicare have had to face. Access to care and choice of physicians for seniors is at risk unless Congress permanently fixes the payment formula, he said.

"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."

CMS is mandated to adjust the Medicare physician fee schedule annually, based on a formula using the sustainable growth rate adopted in the Balanced Budget Act of 1997. Using the formula, CMS has issued negative updates every year beginning in 2002. Congress has intervened over the past several years to postpone a pay cut.

CMS expects the final rule to be published in the Nov. 25 Federal Register, and the agency will accept comments until Dec. 29.

The House is expected to vote soon on legislation (H.R. 3961) to permanently repeal the current Medicare physician payment formula.