March 2003

CMS issues new Medicare payment rates for 2003

The Centers for Medicare/Medicaid Services issued a regulation that boosted Medicare payment rates to physicians. Under the rule, payments for physician services increased an average of 1.6 percent beginning March 1.

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."

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.

Because of the change in payment rates, CMS extended the deadline for physicians to decide whether or not they want to participate in Medicare until April 14. 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.

Source: Medical Newswire

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