Press Releases

CMS TO INCREASE PHYSICIAN PAYMENT RATES FOR 2003

The Centers for Medicare & Medicaid Services today issued a regulation that will boost Medicare payment rates to physicians. Under the rule, payments for physician services will increase an average of 1.6 percent beginning March 1. The increase is included in a final rule that will be published in the February 28 Federal Register.

“The action CMS is taking today will ensure that the doctors who treat Medicare patients will see an increase in the payments they get for those services, rather than the reduction previously anticipated,” said Health & Human Services Secretary Tommy Thompson. “We commend Congress for giving CMS the authority to make these changes, ensuring that Medicare beneficiaries will continue to get healthcare services from the doctors they trust.”

Nearly 40 million older Americans and people with disabilities rely on Medicare to pay for the medical services they receive from physicians and other providers. Physicians are paid for their services according to a fee schedule that is updated annually according to a formula set out in Medicare law. In 2002, the statutory formula required Medicare to reduce rates paid to physicians.   The law would have required Medicare to reduce rates again in 2003. However, the recently enacted spending bill for fiscal year 2003 allowed CMS to revise figures used in the statutory formula and increase the update for 2003 from a negative 4.4 percent to a positive 1.6 percent.

“CMS appreciates the leadership of President Bush and Secretary Thompson in persuading Congress to address the flaw in the physician fee schedule formula this year,” said CMS Administrator Tom Scully. “The corrections we have made to the formula will have a positive impact not only in 2003, but for future updates. More importantly, this rule restores the confidence of physicians, and patients, that the federal government will be a fair partner in the Medicare program.”

Medicare uses the fee schedule to pay for more than 7,000 services rendered to beneficiaries by physicians and other providers. The regulation issued today recalculates the calendar year 2003 physician fee schedule rates based on a 1.6 percent increase to the fee schedule conversion factor –the dollar amount used to translate the resources used in providing a service into a payment rate. In 2002, the conversion factor was $36.20. Under the fee schedule rule released last December, the conversion factor was set at $34.59. In response to the Congressional action, CMS has now set the conversion fact at $36.79. The new fees will apply to services provided from March 1 to December 31, 2003. CMS is also sending revised payment files to the Medicare carriers to allow physicians to be paid at the higher rates for services provided to beneficiaries on or after March 1.

Because of the change in payment rates under this rule, CMS is extending until April 14 the deadline for physicians to decide whether or not they want to participate in Medicare. Participating physicians are paid using a higher fee schedule than that used for nonparticipating physicians, but agree to accept assignment and to bill beneficiaries only for the 20 percent deductible. Nearly 90 percent of physicians enrolled to treat Medicare beneficiaries chose participating status in 2002, and nearly 95 percent of Medicare claims are submitted on an assignment basis.