AAA Focusing on Medicare Reimbursement Legislation

The Centers for Medicare and Medicaid Services (CMS) issued its 2007 Medicare Physician Fee Schedule final rule on November 1. Unless Congress intervenes, the Medicare law includes a statutory formula that will require CMS to implement a minus 5.0 percent update in payment rates for physician-related services, according to the final rule. This is slightly less than the 5.1 percent reduction in the proposed rule. This flawed formula, known as the Sustainable Growth Rate (SGR), compares the actual rate of growth in spending to a target rate, which is based on such factors as the growth in number of Medicare fee-for-service beneficiaries and statutory or regulatory changes in benefits. In previous years, Congress has intervened and temporarily suspended the requirements of the SGR formula in favor of specific, statutory updates.

As previously reported, the American Academy of Audiology has been working with other Medicare provider organizations in support of Congressional action to replace the SGR formula with one that reflects increases in practice costs. The legislation being considered in the Congress would increase the fee schedule by 2.8% in 2007, and replace the SGR, with a formula that reflects increases in practice costs, as recommended by the Medicare Payment Advisory Commission (MedPac).

During a House Energy and Commerce Committee hearing in late September, key lawmakers pledged to act on legislation before the 109th Congress adjourns to at least provide a temporary fix to reverse the proposed five percent cut scheduled to take effect in January 2007. They also committed to the possibility of working toward a long term solution. More recently, key Senators have committed to passing legislation blocking the physician payment cuts before adjournment, but recognized that lawmakers must generate approximately $11 billion to offset the cost of blocking the proposed Medicare payment cuts, a move that could prolong the session. With the results of the elections and its impact on the duration of the lame duck session, lawmakers could forego action on legislation altogether, allowing cuts to go into effect on January 1, 2007. Under this scenario, legislation would likely be introduced in the newly formed Congress to retroactively reverse the imposed Medicare cuts.

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