MedPAC Recommends Physician Pay Increase

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imageOn the heels of a 25% pay cut for Medicare physicians set to take effect on January 1, 2012, the Medicare Payment Advisory Commission (MedPAC), has, in its annual recommendation report to Congress, called for a 1% physician salary increase.

MedPAC Chairman Glenn Hackbarth says the report, released last Tuesday, takes into account payment adequacy for physicians, along with beneficiaries’ access to care, quality of the care received by patients, supply of providers, providers’ costs, and Medicare’s payments."The commission’s goal is to achieve a Medicare program that assures beneficiary access to high-quality care, pays healthcare providers and health plans fairly, and spends tax dollars responsibly," Hackbarth notes, adding that MedPAC supports the use of medical homes, readmissions penalties, and pilot-testing of bundled payments.

In its annual review of the status of the Medicare Advantage (MA) program, which is also part of the report, MedPAC noted that MA enrollment increased to 11.4 million beneficiaries (24% of all Medicare beneficiaries) last year. Enrollment in HMOs, the dominant form of MA plan, rose by 7%. By MedPAC’s calculations, virtually all Medicare beneficiaries now have access to an MA plan, with 99% having access to a network-based coordinated care plan. Ninety percent of beneficiaries have access to an MA plan that includes Part D drug coverage and has no premium (beyond the Medicare Part B premium).

Beneficiaries can choose from an average of 12 plans, including eight coordinated care plans. The commission supports the incorporation of private plans in the Medicare program based on the fact that they offer beneficiaries the option of selecting between traditional Medicare program and the alternative delivery systems provided by private plans."Private plans have greater potential to innovate and to use care management techniques and, if paid appropriately, would have more incentive to do so," the report’s authors write.

The American Medical Association and 130 other medical organizations have repeatedly voiced their frustration with the Medicare payment system. In a March 10 letter to MedPAC, representatives of the group assert that last year, “Congress was required to act five times to pass short-term measures to stop Medicare physician payment cuts scheduled for 2010 and on three occasions, failed to act before cuts were implemented, causing disruptions in processing Medicare payments. These payment uncertainties and delays created serious problems for many physician practices and jeopardized seniors' access to care."