The U.S. House of Representatives has voted to repeal the Medicare payment formula that has mandated ever-steeper pay cuts for physicians treating patients in the federal health care program for eight years in a row.

Late last month the House passed the Medicare Physician Payment Reform Act (HR 3961), which repeals the payment formula and the much despised sustainable growth rate (SGR) component that calls for increases in Medicare volume to be compensated for by decreases in physician payment.

At press time, the bill was to go to the Senate for consideration.

"APA strongly supported House passage and worked closely with the AMA and other physician organizations to secure this most welcome victory for doctors and most particularly for Medicare patients," said APA's Department of Government Relations in a statement released on the APA Web site after passage by the House. "We still face major challenges in getting the Senate to change course and support this legislation, but today's victory is a big step forward."

Passage of the bill is especially crucial, because without action by Congress, physicians are facing a 21.2 percent across-the-board cut in Medicare fees for 2010. HR 3961 would replace that cut with a small positive adjustment. And it would wipe away the $245 billion "debt" that has accumulated from years of postponing scheduled cuts in Medicare payments caused by the SGR formula.

This marks the eighth year in a row that the physician payment formula has mandated an across-the-board cut in Medicare fees and would be the most drastic reduction yet. From 2004 to 2009, Congress intervened every year to reverse the cuts.

The payment decrease for 2010 was announced by the federal Centers for Medicare and Medicaid Services (CMS) in a final rule that appeared in the Federal Register on November 25; the public comment period ends on December 29. Without congressional intervention, the new Medicare payments and policies outlined in the final rule will be in effect on January 1, 2010.

The Obama administration supports repeal of the SGR. "The administration tried to avert the pending fee schedule cut in the FY 2010 budget proposal that it submitted to Congress and remains committed to repealing the SGR," said Jonathan Blum, director of the CMS Center for Medicare Management, in a statement.

Also of importance for psychiatrists is the fact that in the same final rule CMS is proposing to eliminate payment for consultation codes and to increase payments for the evaluation and management codes that are expected to take their place.

APA's Office of Healthcare Systems and Financing (OHSF) has estimated that this change may create a minimal decrease in reimbursement for consults. "What we're really concerned about with the potential loss of these codes is that consultations and collaborative care will be discouraged at the very same time that there is an increased emphasis on integrated care initiatives such as medical homes," said Irvin "Sam" Muszynski, director of OHSF.

Additionally, the CMS final rule also contains a provision increasing the Medicare share of payments for outpatient mental health services from 50 percent to 55 percent, beginning a gradual transition toward parity as outlined in legislation passed by Congress last year.

Further reports about changes to physician payment will be published in Psychiatric News. In the meantime, more information is available by contacting Becky Yowell, deputy director of the Office of Health Systems and Financing, at byowell@psych.org.

The CMS final rule is posted at <www.federalregister.gov/inspection.aspx#special>.