Physician fee schedule update factor decreases for 2002 - Updata - Medicare - Brief Article - Statistical Data Included

Healthcare Financial Management, Jan, 2002

Despite an increase in total Medicare spending, the physician fee schedule update factor will fall 4.8 percent, yielding a conversion factor of 5.4 percent below 2001 levels, CMS announced in a final rule published in the November 1, 2001, Federal Register. Under current law, the update factor is based on a formula reflecting medical inflation and actual spending compared to target spending. Expenditures were so high this year that spending cuts were triggered for next year to stay within the budget caps. In an unfortunate coincidence, the reduction in next year's fee payments was compounded by a decline in inflation rates associated with the recent economic downturn. Even with the payment reduction, CMS estimates that Medicare payments to physicians will total $41.7 billion in 2002, an increase of about 1 percent, or $500 million, over the 2001 amount.

The final rule includes a number of changes in payment policies for specific services. It will expand coverage of preventive services to include annual glaucoma screening for high-risk patients and nutrition therapy for patients with diabetes and renal disease. Also, payment rates for mammography will climb by nearly 17 percent. The final rule's effective date is January 1, 2002.