The following are suggested talking points to use in communications with members of Congress.
ACC members are encouraged to personalize these messages as much as possible. While some
general examples of the impact of the reimbursement reductions are provided in these talking
points, ACC members should include specific examples about how the cuts have affected their
practice and ability to care for patients.
Physicians and other health care providers took a steep cut in Medicare reimbursement effective
Jan. 1, 2002. Reductions to cardiovascular specialists averaged 8.6 percent, with even greater
reductions among cardiovascular subspecialists like those who perform angioplasty procedures
and treat heart rhythm disorders.
The impact of these cuts is already being felt. Some physicians have been forced to stop taking
Medicare patients. Meanwhile, some physicians—frustrated by continually decreasing
reimbursement, increased medical liability insurance costs, and overly burdensome regulatory
requirements—are retiring early.
Some cardiovascular specialists report having to close blood pressure and cholesterol clinics,
forego the purchase of new equipment, lay off staff, and cut back on continuing education.
Practices in some areas of the country, such as Pennsylvania and Washington State, are also
having terrible times recruiting new physicians to treat a growing number of patients because they
cannot afford to pay them a competitive salary.
The source of the problem
The cause of the reduction is a flawed formula used by the Centers for Medicare and Medicaid
Services (CMS) to calculate annual physician payment updates. Without a change in the formula,
the Medicare physician payment update will be reduced by 14.2 percent over the next three
A principle failing of the formula used by the CMS to update physician payments each year is
that it is tied to the growth in the gross domestic product (GDP). The GDP is not an accurate
measure of the costs of providing medical services to Medicare beneficiaries, and fluctuations in
the GDP cause volatile swings in payment updates, as evidenced this year.
Furthermore, tying reimbursement to the GDP penalizes physicians in this country for the decline
in the nation’s economy at a time when there is an increase in Medicare utilization and increased
professional liability insurance costs.
In addition to not accounting for the costs of providing medical services, the current formula also
does not take into account the cost of new, often life-saving technologies, which physician
practices must absorb.
Another important component of this problem are the significant actuarial errors made by the
CMS in 1998 and 1999. At that time, Medicare officials omitted the cost of care for one million
Medicare beneficiaries because of erroneous estimates of GDP growth and fee-for-service
enrollment. As a result, the payment calculations are made as if these one million beneficiaries do
not exist— even though these beneficiaries are clearly visiting physicians and receiving services.
In addition, the CMS includes the cost of drugs administered in physician offices in calculating
the physician spending targets included in the update formula. As a recent legal analysis funded
by a number of physician organizations showed, drugs should be removed from the spending
targets because they do not constitute “physician services.”
It is estimated that if the estimation errors were corrected and the cost of outpatient administered
drugs were dropped from the formula, approximately $62 billion over 10 years would be restored
for physician spending.
Request to Members of Congress
I urge you to support legislation that would prevent future cuts in physicians' Medicare
fees. In addition, Congress should continue to urge the Bush administration to make
important administrative changes that affect physicians' Medicare fees, including
correcting the 1998 and 1999 Medicare enrollee estimation errors and eliminating the cost
of outpatient-administered drugs from the Medicare Fee Schedule update formula.