Corporate Compliance

Proposed changes would reduce Medicare physician fee schedule

Compliance Monitor, August 3, 2005

A proposed change to the payment rate for the Medicare physician fee schedule would reduce payment rates for physicians' services 4.6% for 2006.

The reduction is required by a formula that takes into account substantial growth in overall Medicare spending in 2004, according to a Centers for Medicare & Medicaid Services (CMS) news release.

"The payment reduction shows the need for more effective ways to pay physicians that help them improve quality and avoid unnecessary costs," said CMS Administrator Mark B. McClellan, MD, PhD. "CMS is working with members of Congress, physician organizations, and other healthcare stakeholders on ways to improve physician payment without adding overall Medicare costs, if at all possible."

The physician fee schedule specifies payment rates to physicians and to other providers for more than 7,000 healthcare services and procedures, ranging from simple office visits to complex surgery. The fee schedule is updated on an annual basis according to a formula specified by statute.

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