It’s Official: Medicare Physician Fees Reduced by Nearly 25 Percent

Today, November 3, 2010, the Centers for Medicare and Medicaid Services (CMS) issued a final rule that improves access to preventative care for Medicare beneficiaries — but also issues a steep 23% cut to Medicare physician fees that will take effect December 1, 2010. The cut will be followed by an additional reduction of 1.9% scheduled to take effect on January 1, 2011. Medicare physician fees reduced

The cut comes under the sustainable growth-rate formula. While previous attempts to reduce Medicare physician payments were thwarted by Congress (they delayed a scheduled cut of 20% in June 2010), CMS calls the current measure “critical,” according to an article on, and says officials “are committed to permanently reforming the Medicare payment formula.”

Home health care agencies will also experience a reduction of 4.89% in 2011. However, the new rules also include payment incentives of 10% for primary-care providers and general surgeons in areas considered health professional shortage areas under the Patient Protection and Affordable Care Act. The reduction figure does account for inflation, wage updates, and other factors.

Finally, outpatient hospital payments face greater accountability in the form of increased quality reporting requirements. In order to qualify for full payment, hospitals must report a total of 15 quality measures in 2012 and an additional 8 quality measures in 2013.

Senior advocates fear that these latest measures will actually result in reduced access to medical care for seniors, as they predict that physicians and hospital systems will stop accepting Medicare payments due to reduced fees and increased accountability.

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