Physicians Face 29.5% Medicare Pay Cut in 2012

March 10, 2011

March 10, 2011 — Medicare reimbursement rates for physicians will decrease by 29.5% on January 1, 2012, unless Congress once again acts to postpone what organized medicine likens to doomsday.

Leaders of the American Medical Association and other medical societies have warned that such a huge pay cut would force physicians to turn away not only seniors but also military families whose TRICARE coverage is based on Medicare rates.

An official with the Centers for Medicare and Medicaid Services unveiled the rate reduction for 2012 in a recent letter to the Medicare Payment Advisory Commission. The reduction was triggered by Medicare's sustainable growth rate (SGR) formula for calculating physician pay.

Organized medicine has asked lawmakers to replace the SGR formula, which pegs reimbursement rates to changes in the gross domestic product, with one it considers more equitable. Congress has been postponing SGR-required cuts every year since 2003, causing them to balloon in size in successive years.

Last December, Congress spared doctors a 25% cut on January 1, 2011, by postponing it for 1 year. President Barack Obama's proposed budget for fiscal 2012 calls for delaying the next cut from January 1, 2012, until January 1, 2014, freezing rates in the meantime.

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