Statement of the Hon. J.D. Hayworth, a Representative in Congress from the State of Arizona

Thank you Madam Chairwoman for holding today’s hearing on the Medicare payment formula for physicians. I commend your leadership in addressing this pressing issue that will impact not only physician payment levels, but also beneficiary access to quality health care.

I have heard from many physicians in Arizona who have serious concerns about the physician payment update, which has resulted in a negative 5.4 percent update in 2002. I share their concerns because this significant cut could exacerbate existing access problems for Medicare beneficiaries, particularly in rural communities. Unfortunately, the current flawed formula has nothing to do with the cost of providing health care. I am concerned that the physician payment cut in 2002 and the expectation of similar significant reductions in the next several years may have the potential to sway physicians to retire early or simply choose not to participate in the Medicare program, which would have a serious effect on patient access to care.

As you know, the current physician payment formula links physician updates to the Sustainable Growth Rate (SGR) and changes in the Gross Domestic Product (GDP). The Medicare Payment Advisory Commission (MedPAC) and others have recommended replacing the SGR because it fails to account adequately for changes in physicians’ costs by tying updates to the growth in the economy and exacerbating different payments to different groups for the same services.

I strongly believe that this critical issue must be addressed this year and I again commend your leadership in holding this hearing today. With the input of the physician community, MedPAC, the General Accounting Office, and the Administration, our committee can improve the existing physician reimbursement system. I look forward to continuing to work with you on a new payment methodology that will yield more fair, stable, and predictable updates for physicians.