Colorado Otolaryngology Associates
Colorado Springs, Colorado 80909
February 26, 2002

The Honorable Nancy L Johnson
Chairwoman, House Ways and Means Committee, Health Subcommittee
2113 Rayburn H.O.B.
Washington, DC 20515

Dear Representative Johnson;

I recently learned of the February 28, 2002, hearing on 2002 physician payments. I would like to offer this written comment for consideration during this hearing.

Physicians are very concerned about the 5.4% decrease in Medicare payments. This year this decrease in payment is linked to most if not all-commercial third-party payers. Since 1997 the commercial third parties have been trying to control their costs and increase their profits by changing the way they develop their fee schedules. Fees used to be based on standard unit values by McGraw Hill (now called St. Anthony) but are now based on RBRVU’s (Resource Based Relative Value Units). The sole purpose of this change was to reduce their physician payments. This move has been very successful for the health plans but has left the physicians with less money to run their practices.

As of January 2, 2002, most health plans had completed their conversion to RBRVU’s. Physicians have had no input into this change. Health plans have also changed computer systems to comply with other government regulations and now the systems support only one fee schedule, as I understand it.

My physicians have not received an increase in salary in 7 years. This is far longer than most people in this country have gone without a salary increase. Therefore, you can see that a 5.4% decrease in payment is a deep cut into the physician budget; and you expect this decrease to continue through 2006. I can foresee many physicians having to give up their practices because they cannot afford to run an office at that level of payment.

To add to our problems, over the past two years commercial third-party payers have increased their premiums to employers by 50-60% per year. Health plans have not only increased their premiums but also now get a windfall profit of 5.4%.

In concrete terms the cost to run our practice has increased 6% in the past year. Coupled with this new 5.4% decrease in payments, we are now faced with an increased cost of 11% this year. We cannot sustain increased costs and decreased payments. If this only affected Medicare patients, a solution would be to stop seeing Medicare patients. As it is, our patient mix includes only 10% Medicare patients.

I hope this helps you understand the plight of all physicians in the United States. I need you to understand this issue and develop a formula for the Medicare conversion factor that will be fair and allow physicians to provide quality care to patients and at the same time let the medical business grow.

If you have questions or need clarification, I can be reached at (719) 867-7850. Thank you in advance for your consideration.

Sincerely

Judy Boesen, RN, BGS, MAM
Administrator

                                                                                                                                             J. Lewis Romett, MD
Neiland Olson, MD
    Joel Ernster, MD, FACS
Barton Knox, MD, FACS
                                            J. Christopher Pruitt, MD
                                                         John Hohengarten, MD
Edgar B Galloway, MD