Medicare pays physicians using a fee schedule, or list of prices.This list sets a fixed maximum price for each of more than 7,000 defined services, such as an office visit, a particular surgical procedure, or a specific diagnostic test.
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A problematic formula for paying physicians under Medicare has been in place for years and, since 2003, has been stipulating that there should be mandatory cuts in payments to doctors as a result of the increasing volume of services provided.
However, Congress has consistently postponed those cuts and instead raised Medicare physician fees slightly or held them constant.
In early January 2013, Congress adopted and President Barack Obama signed legislation to postpone a scheduled 26.5 percent reduction in Medicare physician fees and keep rates unchanged until January 1, 2014.