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CMS Should Act To Save Physician Payments, Legislators Insist
Removing drugs from formula would help avoid steep cuts


Avoiding an estimated 31 percent pay cut for physicians from 2006 to 2012 would be "prohibitively expensive," two influential legislators warn.

Unless the Centers for Medicare and Medicaid Services acts to fix the Sustainable Growth Rate (SGR) formula for physician payment updates, Congress will be unable to avert the roughly 5 percent annual cuts over the next seven years, warn Rep. Bill Thomas (R-CA) and Nancy Johnson (R-CT), chairs of the House Ways & Means Committee and Health Subcommittee respectively, in a July 12 letter to CMS.

CMS could do two things to adjust the assumptions in the SGR, and therefore make a rescue of physician payments appear less expensive, say Thomas and Johnson:

* remove drugs retroactively from the SGR. Currently the formula includes drugs provided incident to a physician services, which have been rising much faster than other physician services. "Drugs are not administered under the physician fee schedule," so it's "illogical" to include them in physicians' spending totals, the letter chides. CMS has the authority to remove drugs from the formula and thus reduce the need for steep cuts.

* allow for the costs of new and expanded benefits. When CMS adds coverage for services such as PET scans for Alzheimer's patients, cochlear implants, carotid artery stenting and photodynamic therapy for macular degeneration, it increases physician spending and adds to the pressure for cuts. CMS should share its estimates of the costs of these new coverage decisions with Congress, Thomas and Johnson insist.