U.S. Backs Off Plan to Reduce Medicare Payments to Doctors

Under heavy pressure from doctors and Congress, the Department of Health and Human Services has backed off a plan that would have cut Medicare payments to physicians by $6.9 billion over the next five years, sources said Saturday.

The decision came after a firestorm of protest from the medical community, which accused the department of bad faith and of flouting congressional intent in devising a new fee schedule designed to pay family doctors relatively more and surgeons relatively less than they receive now.

Physicians said the new schedule was supposed to be “budget neutral,” reallocating but not reducing overall payments.

A redrafted will achieve the goal of paying family physicians and general practitioners more and surgeons less. But it will not reduce the total amount of money doctors would have received under current law as the initial draft would have done, sources said.

As a result, the sources said, the new fee schedule will be “budget neutral.” If the current system had been continued, an estimated $198 billion would have been paid out over the next five years for doctor services. Under the new schedule, even though some doctors will get less than they would have and others will get more, total payments will still be $198 billion.

The $6.9-billion cut initially proposed by HHS had been described by Medicare administrator Gail R. Wilensky as an unintentional side effect of technical language in a 1989 law that ordered the Department of Health and Human Services to revise Medicare fees.

The law’s aim was to improve fairness and uniformity in the Medicare payment rates for doctors by increasing payments for “undervalued” services, such as those provided by family physicians and general practitioners, while reducing them for “overvalued” services such as surgery and some high-tech procedures.

Congress insisted on a budget-neutral schedule so that its attempts to make payments fairer could not be portrayed as a pretext to slash spending.