Administration's Budget Seeks Changes in Medicare Physician Payment System

AAFP News, Washington 5/27/2009 - The government has released details of a fiscal year 2010 budget proposal that calls for reforming the current Medicare payment system by aligning payment incentives with improvements in quality and efficiency.
"The administration believes that the current Medicare physician payment system, while having served to limit spending to a degree, needs to be reformed to give physicians incentives to improve quality and efficiency," said a budget-in-brief document (117-page PDF; About PDFs) released by HHS in early May. "As part of health care reform, the administration would support comprehensive, but fiscally responsible reforms to this payment formula."
The administration's budget estimates that it would cost $311 billion to prevent physician payment cuts that are called for under the sustainable growth rate, or SGR, formula and to keep physician payments level during the next 10 years. To help compensate, the budget would greatly increase funding for a Medicare Integrity Program to help fight fraud and abuse.

Physicians are facing a 21 percent reduction in payment rates on Jan. 1 unless Congress acts to block the cut.

In many respects, the budget seeks to build on the recently enacted American Recovery and Reinvestment Act of 2009, or ARRA, which makes substantial investments in education and training programs for primary care physicians and other health-related programs. The administration's budget, for example, proposes $34 million in additional funding for the National Health Service Corps, or NHSC, in FY 2010, money that would augment the $300 million allocated to the NHSC by the ARRA. In addition, the Obama administration has proposed an increase in Title VII grants for training family physicians from $48.4 million in the current fiscal year to $56 million in FY 2010.

Source: AAFP News