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Letter to the Honorable John M. Spratt Jr. 1 (March 2009)

handle is hein.congrec/cbo9354 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 March 27, 2009 Honorable John M. Spratt Jr. Chairman Committee on the Budget U.S. House of Representatives Washington, DC 20515 Dear Mr. Chairman: This letter responds to your request for an assessment of the potential effects of the substantial across-the-board reductions in Medicare's payment rates for physicians that are called for under current law. The Congressional Budget Office (CBO) estimates that, without legislative action, physician payment rates under Medicare will be reduced by about 21 percent in January 2010 and by about 6 percent annually for at least several years thereafter. By 2014, the cumulative reduction in the rates will be about 40 percent. The effects of such a large reduction in payment rates on physicians' participation in Medicare, beneficiaries' access to care, and Medicare expenditures are highly uncertain. Previous studies have examined the effects of smaller or more targeted changes in payment rates, but those studies are of limited relevance for assessing the potential effects of the substantial fee reductions that are required under current law. Because of the uncertainty about those effects and the limited applicability of previous studies, CBO supplemented its analysis by consulting with a number of experts in the field of health care to obtain their views. The effects of the fee reductions could manifest themselves in several ways: by affecting spending on physicians' services directly; by changing the use of other services covered by the traditional Medicare program; or by altering the share of enrollees who get all of their Medicare benefits through a private health plan. Some of those effects could result in costs that are lower than those projected in CBO's baseline, and some could yield higher costs. Because of the uncertainty about the size of those effects and whether, on balance, they would lead to more or less federal spending, there is no basis at this time for concluding that CBO's baseline projections of Medicare expenditures under current law are too high or too low. Spending on Physicians' Services At present, nearly all physicians participate in Medicare and accept at least some new Medicare patients, and surveys have found that beneficiaries do not face significant difficulties in obtaining access to physicians' services.1 Medicare has been able to 1Medicare Payment Advisory Commission, Report to the Congress. Medicare Payment Policy (March 2009).

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