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Medicare proposes 5.1% cut for doctors

New reimbursement rules seek to stem growth of procedures

WASHINGTON -- Doctors will see a 5.1 percent cut in their reimbursement rates for Medicare patients next year, according to proposed federal rules disclosed yesterday.

Hospitals will gain a 3 percent increase in their reimbursement rates for outpatient care, but they will get the full increase only if they submit data to the government indicating they're following guidelines that improve patient care.

Mark McClellan, who oversees the Medicare program in the Bush administration, said the cut in doctors' payments and the call for more quality reporting from hospitals reflect a payment system in the United States that can't be sustained without change.

``We need to get out of the vicious cycle of rapid growth in utilization and spending," McClellan said.

Under the current system, Medicare pays a set fee when a particular service is performed. As a result, there is an incentive to order more procedures per patient, and that's occurring at a dramatic rate, McClellan said.

For example, payments to hospitals for outpatient work went up nearly 12 percent in 2006, mainly because of growth in the number and intensity of treatments. Payments will go up 9.2 percent next year, McClellan predicted, even though the payments for a particular service are going up only 3 percent on average.

He said the growth in services per patient is of great concern because of its effect on taxpayers and Medicare beneficiaries who pay higher premiums.

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