Doctors Face 7% Cut in Medicare Fees

Ready for the annual Medicare budget cuts?

Every year around this time, Medicare announces plans to cut compensation to doctors, setting off protests by the elderly and, eventually, emergency action by Congress and the White House.

This year, Medicare says the cuts will amount to 27.4% -- enough to motivate many doctors to dump their Medicare patients in favor of the younger crowd.  

Seniors and their lobbying organizations -- most notably AARP -- are already taking to the barricades to fight cuts to Social Security and Medicare benefits by the so-called Congressional "Super Committee" which is supposed to be carving billions out of the budget.

"With a typical yearly income of $18,819, seniors are already struggling with high costs for food, health care and utilities while facing declining pensions, plummeting home values and deep losses to retirement and savings accounts," AARP’s Senior Vice President for Government Affairs Joyce Rogers said.

Rogers said seniors currently pay an average of $4,200 per year out of their own pockets for health care. 

“Our message to the super committee members today is this: No cuts to Medicare or Social Security benefits. Voters deserve a national conversation about health and retirement security, not a political deal that cuts the benefits they’ve earned,” she said.

Physician fees

The proposed reductions in physicians' fees are unrelated to the Super Committee's efforts.  The annual doctor-fee imbroglio harks back to a law passed by Congress in 1990 that calls for automatic cuts to doctors if Medicare costs keep rising.

Like lots of laws, it looked good when it was passed but has turned out to be totally unworkable.  Each year Congress bows to pressure and grants an exemption, as it's likely to do this year, fearful of the wrath of 48 million Medicare beneficiaries.

Even Medicare says the 27.4% figure is unrealistic.

“This payment rate cut would have dire consequences that should not be allowed to happen,” said Donald M. Berwick, M.D., administrator of the Centers for Medicare and Medicaid Services in a statement on the agency's Web site.  “We need ...  to solve this problem once and for all. That’s why the President’s Budget and his Plan for Economic Growth and Deficit Reduction call for permanent, fiscally responsible reform and why we are committed to working with the Congress to achieve a permanent and sustainable fix.”

"We believe strong efforts are needed to evaluate Medicare’s fee schedule to ensure that it is paying accurately and to ensure that Medicare beneficiaries continue to have access to vital services,” said Jonathan Blum, deputy administrator and director for the Center for Medicare.