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New Rule Governing Medicare's Payments to Phyisicians 1 (November 19, 2009)

handle is hein.congrec/cbo1092 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 November 19, 2009 Honorable Paul Ryan Ranking Member Committee on the Budget U.S. House of Representatives Washington, DC 20515 Dear Congressman: This letter responds to questions you have asked about Medicare's payments to physicians and the budgetary effects of H.R. 3961, the Medicare Physicians Payment Reform Act of 2009, as introduced on October 29, 2009. In particular, you inquired about the budgetary impact of a new regulation specifying how payments to physicians should be determined under current law and about the total budgetary impact of enacting both H.R. 3961 and H.R. 3962, the Affordable Health Care for America Act. The New Rule Governing Medicare's Payments to Physicians On October 30, 2009, the Centers for Medicare and Medicaid Services promulgated a final rule, Payment Policies Under the Physician Fee Schedule and Other Revisions to Part Bfor CY 2010. I That rule removes physician-administered (P-A) drugs from the calculation of the sustainable growth rate (SGR) formula, which determines the updates to payment rates for physicians' services. Removal of P-A drugs from the SGR will increase Medicare's spending for fee-for-service physicians' services and the Medicare Advantage (MA) program, as well as the Department of Defense's outlays for the TRICARE program. Because beneficiaries enrolled in Part B of Medicare pay premiums that offset about 25 percent of the costs of their benefits, premium income will rise to offset part of the added costs. On net, the Congressional Budget Office (CBO) estimates that this new rule will increase federal spending by $78 billion over the 2010-2019 period. The Budgetary Impact of Enacting Both H.R. 3961 and H.R. 3962 Under current law, including the new rule, Medicare's payment rates for physicians' services will be reduced by about 21 percent in January 2010, and CBO estimates those payment rates will be reduced by about 2 percent annually for several subsequent years. H.R. 3961 would increase those payment rates by 1.2 percent in 2010 and restructure the I See http://www.federalregister.gov/OFRUpload/OFRData/2009-26502 Pl.pdf. The final rule removed spending for physician- administered drugs from the SGR calculations, specified the Medicare economic index for 2010, and made numerous other changes to the physician fee schedule.

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