Sign-On Letter for Physician Fee Schedule Cuts

September 13, 2002

The Honorable Wayne Allard                          
United States Senate
525 Dirksen Senate Office Building
Washington, DC  20510

Dear Senator Allard:

The Senate urgently needs to pass legislation to avert a serious crisis for Medicare patients.  As you ponder various proposals to modify Medicare payments, restoring reasonable payments to physicians and other health professionals should be the highest priority.

The undersigned organizations strongly urge the Senate to build and improve upon the legislation that the House of Representatives passed in June (H.R. 4954):

• As its first priority, we urge the Senate to provide for a 2003 payment update of 3% to cover documented increases in practice costs.
• Administrative policy changes announced after House passage of H.R. 4954 also would increase the 2004 and 2005 payment updates and the Senate legislation should provide for these higher updates.
• As its second priority, we urge the Senate to begin addressing the longer-term structural reforms in the update system that will be necessary after 2005.
• The Senate also needs to clearly acknowledge that any proposal that does not eliminate the possibility of future cuts is a temporary solution that will require additional action within a few years.
• Evidence shows that Medicare patients' access to care will continue to decline significantly unless the Senate acts within the next few weeks.

Recent data from multiple studies, including beneficiary representatives, indicates that Medicare payment cuts reduce beneficiaries' access to service.  Rural communities are particularly at risk.  Physicians and the other professionals affected by these payment cuts are the cornerstone of the healthcare system and, without them, other providers such as hospitals and nursing homes could not continue to operate.  Having suffered a 5.4% cut in payment levels this year as fees for 2002 were rolled back below their 2001 levels, these practitioners have already had to make difficult decisions that have led to access problems for some Medicare beneficiaries.  Yet under current law, payments will be cut by an additional 12% from 2003-2005, forcing more physicians and health professionals to take steps that cannot help but exacerbate the current access problems.

According to a survey conducted by the American Medical Association (AMA), 24% of physicians have placed limits on the number of Medicare patients they treat or plan to institute limits in the next six months.  A survey of 30 states by the MedicareRights Center found that Medicare beneficiaries in more than half of them are already having trouble finding a physician who accepts new Medicare patients.  The American Academy of Family Physicians has also released survey data showing that nearly 22% of family physicians are no longer taking new Medicare patients, a significant increase from the same survey done one year earlier.

Following passage of legislation by the House of Representatives to address the payment crisis, the Centers for Medicare and Medicaid Services (CMS) announced that, due to newer data and a policy change, its estimate of medical practice cost inflation for 2003 has increased from 1.6% to 3%.  The revised estimate of practice cost inflation for 2003 represents a considerably more realistic estimate of recent cost increases, including the skyrocketing costs of medical liability insurance.  This increase must be reflected in the payment update for 2003.  As its first priority, therefore, we urge the Senate to provide for a 2003 payment update of 3% to cover this documented increase in practice costs.  In addition, the CMS policy change would increase the 2004 and 2005 payment updates under H.R. 4954.  The Senate should adopt legislation that will provide for these higher 2004 and 2005 payment updates.

Another important provision of the legislation passed by the House is a permanent change in a key factor of the update system from annual GDP growth to 10-year average GDP growth.  This change will help moderate the volatility in payment updates that has been caused by year-to-year fluctuations in GDP.  The Senate's second priority, therefore, should be to also begin addressing the longer-term structural reforms in the update system that will be necessary after 2005.

The legislation that was passed by the House would avert the immediate crisis by delaying the pending cuts and providing for positive updates in 2003-2005.  The House sponsors recognize that, while this legislation will delay the pending cuts, it is an interim solution, and they are committed to revisiting the update system and continuing work on a longer-term solution.  It is critical that the Senate pass legislation as soon as possible that builds upon and strengthens the House provisions.  Further, it must be clearly understood that any proposal that does not eliminate the possibility of future cuts is a temporary solution that will require additional action within a few years.

On November 1, the 2003 Medicare payment schedule will be published and physicians and other health professionals will need to decide whether or not to sign or continue their Medicare participation agreement for 2003.  Recent data indicates that if the Senate fails to act within the next few weeks it could have serious consequences for these participation decisions.  When asked if they would continue to sign Medicare participation agreements if there were additional Medicare payment cuts, 42% of physician respondents to the AMA survey said they would not.  Legislation to remedy this Medicare payment and patient access problem must be signed into law by November 1.

Sincerely,

American Academy of Audiology
American Academy of Child and Adolescent Psychiatry
American Academy of Dermatology Association
American Academy of Facial Plastic and Reconstructive Surgery
American Academy of Family Physicians
American Academy of Neurology
American Academy of Ophthalmology
American Academy of Otolaryngology-Head and Neck Surgery
American Academy of Physical Medicine and Rehabilitation
American Academy of Physician Assistants
American Academy of Sleep Medicine
American Association for Thoracic Surgery
American Association for Vascular Surgery
American Association of Clinical Endocrinologists
American Association of Clinical Urologists
American Association of Electrodiagnostic Medicine
American Association of Neurological Surgeons
American Association of Nurse Anesthetists
American Association of Orthopaedic Surgeons
American College of Cardiology
American College of Chest Physicians
American College of Emergency Physicians
American College of Nuclear Physicians
American College of Nurse-Midwives
American College of Nurse Practitioners
American College of Obstetricians and Gynecologists
American College of Osteopathic Surgeons
American College of Physicians-American Society of Internal Medicine
American College of Radiology
American College of Rheumatology
American College of Surgeons
American Gastroenterological Association
American Geriatrics Society
American Medical Association
American Medical Directors Association
American Medical Group Association
American Nurses Association
American Occupational Therapy Association
American Optometric Association
American Physical Therapy Association
American Podiatric Medical Association
American Psychiatric Association
American Psychiatric Nurses Association
American Society for Clinical Pathology
American Society for Gastrointestinal Endoscopy
American Society for Reproductive Medicine
American Society for Therapeutic Radiology and Oncology
American Society of Anesthesiologists
American Society of Cataract and Refractive Surgery
American Society of Clinical Oncology
American Society of General Surgeons
American Society of Hematology
American Society of Plastic Surgeons
American Speech-Language-Hearing Association
American Thoracic Society
American Urological Association
Association of American Medical Colleges
Cleveland Clinic Health System
College of American Pathologists
Congress of Neurological Surgeons
Infectious Diseases Society of America
Joint Council of Allergy, Asthma and Immunology
Marshfield Clinic
Mayo Clinic
Medical Group Management Association
National Association of Social Workers
National Medical Association
National Organization of Nurse Practitioner Faculties
National Rural Health Association
North American Society of Pacing and Electrophysiology
North American Spine Society
Ophthalmic Outpatient Surgery Society
Renal Physicians Association
Society for Vascular Surgery
Society for Cardiac Angiography and Interventions
Society of Critical Care Medicine
Society of Gynecologic Oncologists
Society of Interventional Radiology
Society of Nuclear Medicine
Society of Thoracic Surgeons