Medicare to Slightly Reduce Big Physician Pay Cut in 2012

The Centers for Medicare and Medicaid Services (CMS) announced this week that it would cut Medicare reimbursement for physicians by 27.4% on January 1, 2012, instead of 29.5% as previously planned.

The slightly lower reduction in reimbursement appears in the final regulations that CMS released Wednesday regarding the 2012 Medicare Physician Fee Schedule. Medicare sets these fees using the sustainable growth rate (SGR) formula, which organized medicine wants to abolish. The SGR formula establishes an annual target for Medicare spending on physician services based in part on annual growth of the gross domestic product.

In March 2011, CMS estimated that physicians would be subject to a 29.5% reduction in reimbursement. The change to 27.4% reflects the fact that Medicare costs this year have grown more slowly than expected, according to the agency's announcement.

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Sources: Medscape Medical News; WebMD, LLC; CMS