by Government Relations Staff

November 15, 2006 — The Centers for Medicare and Medicaid Services (CMS), the federal agency that runs the Medicare program, released the final 2007 physician fee schedule rule on November 1. This final rule contains both the 5 percent “sustainable growth rate” (SGR) cut and a 9 percent cut in psychologist reimbursement associated with the 5-year review rule initially proposed on June 29, 2006.

The 5 percent SGR cut is required by statute to contain the rate of Medicare cost increases. The APA Practice Organization has successfully fought back this cut in years past. The 9 percent 5-year review cut is associated with CMS's increase of payments for evaluation and management services. Under Medicare law, when CMS increases payments for certain Medicare services, it must decrease payments for other services to maintain budget neutrality, and in this instance, CMS has provided an across-the-board cut to a part of the payment formula for all provider services. While it is of little comfort, all Medicare providers are facing these cuts to a varying degree.

With the support of many of our members, we have been fighting to prevent these cuts — particularly the 9 percent 5-year review reduction. Specifically, we have met with many members of key congressional committees to assist us in this effort. In addition, we are calling on the Speaker of the House of Representatives and the Senate Majority Leader to avert these cuts due to their impact on our provider reimbursement rates and on Medicare patient access to the services that we provide.

Unfortunately, it is unlikely that Congress will address the issue this year, and the cuts will occur in January. We are working for any opportunity before the end of 2006, but if Congress does not act we will seek a resolution as early as possible next year. Our experience is that such a resolution will likely include a retroactive adjustment to payments once the cut is implemented.

Please contact our government relations office at 800-374-2723, ext. 5889 with your comments or questions.