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Administration Cuts Medicare Physician Fees While Overpaying Private Plans

  • November 6th, 2003

The Bush administration will be reducing Medicare's physician reimbursements by 4.5 percent in 2004. At the same time, the administration is expected to pay private health plans 19 percent more than traditional Medicare to help them compete with traditional Medicare.

The administration says it will make the physician pay cuts despite a provision in the 2003 omnibus spending package that provided $54 million over 10 years to avoid such cuts. That law blocked an administration-proposed pay cut for 2003 of 4.4 percent. The 2003 pay cut, which was scheduled to go into effect in March, was predicted to trigger a "meltdown" in the number of doctors willing to treat Medicare patients.

The American Medical Association says the 4.5 percent cut for 2004 will make physicians reluctant to accept new Medicare patients. AMA President Dr. Donald Palmisano said physicians are already limiting the number of new Medicare patients and that the new reimbursement cuts will "make it even harder for seniors to get the health care they need."

Meanwhile, the Bush administration is expecting in 2004 to pay private Medicare health plans 19.3 percent more than traditional Medicare spends to provide coverage to people on Medicare, according to government data contained in a report issued by the Medicare Rights Center, a national consumer organization.

'Although it has been known that private plans have much higher administrative and other costs than traditional Medicare, little attention has been paid to the extent that the Administration is overpaying private insurance companies to entice them into the Medicare market,' said Robert M. Hayes, president of the Medicare Rights Center.

The report on private plan overpayments comes as Congress debates a proposal that would require traditional Medicare to compete with private plans.

'People with Medicare no doubt would welcome a fair competition that allows the most efficient health plan, be it private or government, to win their business,' Hayes said. 'But the private insurance companies and their backers in Congress know they cannot compete on a level playing field with traditional Medicare. If a competitive race is to be meaningful, private for-profit competitors cannot be given a 19 percent head start.'

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Last Modified: 11/06/2003

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