Endocrine Insider
February 22, 2008

At its most recent meeting, the Medicare Payment Advisory Commission (MedPAC) frustrated physicians when it chose, for the second year in a row, not to recommend an overhaul of the physician payment system—a change that the physician community strongly supports. Instead, MedPAC chose to recommend a 1.1 percent increase to physician payments in 2009, estimating that this slight bump in physician payments would cost approximately $2 billion in 2009 and $10 billion over five years. While a payment increase would be a welcome change for endocrinologists and other physicians who have been battling proposed payment decreases for the past few years, a 1.1 percent increase may have little to no effect on actual payments received, due to inflation and to a budget neutrality adjuster that the Medicare program applies to help regulate spending.

In addition to MedPAC’s physician payment recommendation, Medicare trustees have estimated for a second year in a row that by 2013, more than 45 percent of Medicare spending will come from general tax revenue as opposed to payroll taxes and premiums paid by Medicare beneficiaries. When trustees make this estimation two years in a row, the president is required by law to propose legislation to reduce Medicare spending. Late last week, the president submitted a proposal estimated to cut spending in the Medicare program by approximately $3.2 billion over five years.

The president’s proposal includes developing a system that will encourage nationwide adoption of electronic health records by physicians. The measure also calls for physician quality improvement and performance measurement data to be accessible to patients. Medicare recipients with incomes higher than $82,000 per individual or $164,000 per couple would also be required to pay higher premiums for their Part-D drug benefit. Democrats have stated that the president’s proposal is “dead on arrival,” but it remains to be seen whether members of Congress can find compromise on this very contentious issue.