MGMA's President Testifies That Current Medicare Payment Formula is Inadequate

ENGLEWOOD, Colo. -- "Today, many physician group practices are in a state of financial crisis," said William F. Jessee, MD, CMPE, president and CEO of the Medical Group Management Association (MGMA) in testimony before the Practicing Physicians Advisory Council (PPAC). Jessee urged the Centers for Medicare & Medicaid Services (CMS) to use industry-specific measures for overhead costs in the Medicare payment formula. "It is critical that PPAC direct CMS to do everything in its administrative power to fix this broken payment system."

Jessee highlighted results from MGMA's 2003 Medicare participation questionnaire, in which 52 percent of responding group practices said they plan to reduce the number of Medicare beneficiaries they treat if additional payment reductions occur. Sixty-eight percent of the groups polled said they will postpone investments in new technology and 62 percent intend to limit expansion of their practices. Respondents directly attributed these difficult choices to the 2002 and 2003 Medicare physician fee schedule reductions.

"Decreasing Medicare reimbursement rates, increasing operational costs and skyrocketing professional liability insurance premiums are leaving physician groups across the country in peril. Many are at the crossroads concerning their current and future ability to provide access to Medicare beneficiaries," said Jessee.

Recent MGMA data indicate that operating costs for multi-specialty group practices are rising 5 percent annually, while the average Medicare reimbursement increased approximately 1 percent annually over the last 10 years.

The MGMA, founded in 1926, is the nation's principal voice for medical group practice. MGMA's 19,000 members manage and lead more than 11,000 organizations in which more than 220,000 physicians practice. MGMA's core purpose is to improve the effectiveness of medical group practices and the knowledge and skills of the individuals who manage and lead them.

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