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From the July-August ACP-ASIM Observer, copyright 2002 by the American College of Physicians-American Society of Internal Medicine.

ACP-ASIM supports House physician payment proposal

The College voiced its support for a House of Representatives' proposal that would increase physician payments for Medicare services over the next three years.

In a May 29 letter to House Speaker J. Dennis Hastert (R-Ill.) and other House leaders, College President Sara E. Walker, MACP, praised the proposal, which would modify the formula used to determine physician fee updates and replace projected fee cuts over the next three years with increases of 2% to 2.5%.

Adoption of the proposal would be a short-term fix to physician payment problems that led to this year's 5.4% cut. However, Dr. Walker wrote that the College is especially interested in a long-term solution: enacting legislation to develop a new formula for determining physician payments.

The physician payment proposal is now part of the House leadership's overall Medicare reform package. The package now seems the best way to avoid further cuts in the physician fee schedule, Dr. Walker said in the letter.

For a copy of Dr. Walker's letter, see


College challenges CMS on correcting payment formula errors

A recent analysis found that the Center for Medicare and Medicaid Services (CMS) has the legal authority to correct mistakes it made in crafting the formula used to calculate Medicare's annual physician payment updates. Those errors will have reduced physician payments by more than $40 billion over a 10-year period, contributing to cuts in payments of 20% within the next four years.

Conclusions about the agency's legal authority to correct the errors were detailed in a legal analysis commissioned by 40 different medical organizations, including the College and the AMA. Released in late May, the analysis was performed by a former deputy administrator and chief counsel to HCFA, now the CMS.

The analysis pinpoints several specific errors built into the sustainable growth rate (SGR) formula, used since 1998 to calculate yearly physician payment updates. Those errors include inflated figures for Medicare part B enrollees and underestimated increases in the gross national product. CMS has admitted that such errors have reduced physician payments by more than $10.5 billion over the past four years.

The analysis also points out that including the cost of outpatient prescription drugs as an expenditure in the SGR formula further hurts physicians, and argues that those costs should be removed from the calculation.

As medical groups protest this year's 5.4% payment cut, CMS has maintained that only Congress has the authority to correct formula errors or enact changes. The new analysis, however, challenged that contention.

Correcting formula errors would reduce pending physician payment cuts, the College pointed out in a press release on the analysis. It would also make any new payment formula that Congress crafts much less costly, and would relieve pressure on Congress to divert funds from other segments of Medicare to bolster physician payments.

For several years, the College has maintained that pegging physician fees to the gross national product unfairly penalizes physicians for economic setbacks they can't control.

For a copy of the College's press release, see


College seeks liability reform to safeguard access to women's health services

The College joined 12 other medical organizations in writing to members of the House of Representatives, asking them to safeguard women's access to health care by supporting passage of the HEALTH Act (HR 4600). The liability insurance reform measure would, among other provisions, put caps on noneconomic damages and contingency fees in malpractice suits.

Obstetrics is one of the specialties hardest hit by the current liability crisis, which has led to prohibitively high premiums in some states and is forcing some obstetricians to give up practice, according to the June 5 letter. As access to obstetric care tightens, the letter states, fewer women will be able to get essential prenatal care.

But the letter makes clear that liability problems affect women's health care beyond obstetrics. As generalists also face rising premiums, women's access to all types of medical care will be curtailed.

Access problems could be particularly acute in rural areas, where care may already be marginal due to a shortage of health care professionals. And skyrocketing premiums may lead more community clinics to close. The country's 39 million uninsured—mostly women and children, according to the letter—depend on such clinics for medical care.

For full text of the letter, see


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