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Fracas Over Medicare Fees

The Bush administration says unless Congress changes exiting laws, it will cut Medicare payments to doctors next year — a move that some feel may reduce service to elderly patients.

According to The New York Times, the 4.2 percent cut is required under rules that tether the growth of Medicare costs to the expansion of the economy. If costs exceed certain limits related to economic growth, Medicare must scale back.

But, the newspaper reports, the administration disagrees with some in Congress and many doctors over whether the cuts can be avoided, whether they are justified, and what impact they will have.

The White House says Congress must change the cost formulas in order for the cut to be avoided. This could be done within pending legislation to add a prescription drug benefit to Medicare, which provides health insurance to 40 million Americans.

The two houses are currently working to reconcile different versions of the legislation. The competing versions approach the cost problem differently: the House increases payments to doctors by 1.5 percent the next two years; the Senate version cites flaws in existing law but does not change it.

Some in Congress believe the cost cut can be avoided without new legislation, if the administration revises its calculations.

According to The Times, Reps. Billy Tauzin of Louisiana, Bill Thomas of California and Nancy Johnson of Connecticut — all Republicans — wrote the administration to argue that it is improper to consider the price of drugs administered by doctors when calculating the increase in doctors' costs.

Those drugs have increased in price more than doctors' costs, and including the costs of those drugs may have forced the cuts required by law.

The White House says the cut will not hurt Medicare beneficiaries. But the head of the American Medical Association says the reduction, coming on top of a 5.4 percent cut last year, will have an impact.

"Physicians want to keep treating Medicare patients, but there comes a point where it is just not economically reasonable," Dr. Donald J. Palmisano, the AMA head, told The Times.

Outside analysts have been calling for Medicare to adopt a system that more accurately gauges doctors' costs.

The administration will publish the proposed rule Friday and could amend it based on public comment received between now and October.

In the negotiations over the new Medicare bill, lawmakers have already struck agreement over technical portions covering Medicare contracting, patient appeals and other regulatory matters.

Difficult negotiations are expected on other parts of the bill, which proposes a historic expansion of Medicare to give recipients some help with rising drug costs. Negotiators expect to spend weeks reconciling a mostly bipartisan Senate bill with a Republican-backed House bill.