Medicare physician payments to rise 1.5 percent in 2005

Healthcare Financial Management, Sept, 2004

Physicians would receive a 1.5 percent increase in Medicare payments next year under a proposed rule posted to the CMS web site July 25. The 2005 increase would match the increase physicians received in 2004. This and other changes required by the MMA are outlined in the agency's proposed 2005 update to the physician fee schedule.

The 1.5 percent increase supersedes a 3.7 percent decrease that would have been required under previous law. End-stage renal disease facilities would receive a 1.6 percent payment increase in 2005. Overall, CMS projects 2005 spending for the 875,000 healthcare professionals paid under the fee schedule to be $55 billion, a 4 percent increase over the projected 2004 spending.

Among other proposed changes, preventive care benefits lead the list. These include:

* An initial physical for all new beneficiaries

* New coverage of cardiovascular screening blood tests

* Diabetes screening tests for at-risk beneficiaries

Improved access is addressed through incentive payments: 5 percent extra for physicians practicing in physician scarcity areas and 10 percent extra for those in health professional shortage areas (HPSAs). Some physicians would be hurt by proposed changes to drug payments, also required by the MMA, that convert the payment basis from average wholesale price to average sales price.

The proposed rule was published in the August 5 Federal Register, with comments due September 24. CMS plans to issue the final rule by November 1, to become effective January 1, 2005.

To read the proposed 2005 physician fee schedule update, go to www.cms.hhs.gov/regulations/pfs/ 2005/1429p.asp.

To browse the physician services section of the HFMA Resource Center's Medicare payment focus area, go to www.hfma.org/resource/medicarepay1.htm#phy.