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2008 Medicare physician payment rates: What to expect in your practice Factors affecting 2008 rates In the waning hours of the 2007 legislative session, the U.S. Congress passed a law that postponed for six months the 10 percent cut in the Medicare conversion factor that was slated to occur on Jan. 1, 2008. This law provides for a 0.5 percent increase in the conversion factor from January through June 2008. The conversion factor change is not the only change affecting 2008 Medicare payment rates, however. Payment changes will vary by service, specialty and locality based on the following factors: • This year will be the second of a four-year transition to revised practice expense relative value units. • A number of services have revised relative value units for physician work. This change particularly affects anesthesiology, home health and eye exam services, which increase significantly. • The budget neutrality adjustment created last year to adjust for changes from the 5-year review of work values has been increased, which will decrease payments for most services by about one percent. • The geographic adjustment factors have been updated, as they are every three years. The magnitude of the geographic changes is generally small but it affects many payment localities. In addition, the law just passed by Congress continued the floor on the work GPCI and the physician scarcity area bonuses until June 2008. • Some services have been added to those that are subject to imaging payment cuts stemming from the Deficit Reduction Act of 2005 which limits payments to no more than the comparable payment in hospital outpatient departments. The combined impact of these various payment changes on your practice depends on your specialty, location and service mix. When all of the changes are averaged out across all physicians, there should be a slightly positive increase in rates, but many physicians will see net decreases in payments. Many other payers as well as Medicare Advantage plans link their rates to the Medicare rates in some way. No information is available about how other payers plan to adjust their rates in response to the six-month intervention by Congress.
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