The Bush administration announced plans Tuesday to cut Medicare (search) payments to cancer doctors, saying taxpayers have been paying the physicians up to twice what they should for certain medications.

The proposed changes would save the government $530 million and Medicare beneficiaries $270 million next year, said Mark McClellan, administrator of the Centers for Medicare and Medicaid Services. Medicare spent $10.5 billion last year on prescription medicines administered in physician offices and clinics.

Cancer doctors and patient advocates said the proposal could force a dramatic change in care, with patients forced to get treatment in hospitals, sometimes far from their homes, rather than in physicians' offices.

"A patient of mine in rural Illinois may have to drive another 50 miles," said Dr. Edward Braud, a medical oncologist who was interviewed by telephone Tuesday from his clinic in rural Jacksonville, Ill.

Ellen Stovall, a two-time cancer survivor who is president and chief executive of the National Coalition for Cancer Survivorship (search), said, "Our concern is that whatever cost-savings may be realized will come at the expense of quality care for patients."

Cancer specialists' revenues could decline 2 percent to 8 percent, McClellan said. Payments for some treatments for prostate cancer (search) would be cut in half under the proposal.

Drugs dispensed in doctors' offices to treat lung illnesses, for which Medicare pays 90 percent more than the sales price, also would be affected by the proposed changes, he said.

"We're going to get more for our money," McClellan said.

Doctors have long acknowledged that the payment system has been out of whack for cancer care administered in their offices. Several studies have documented that drug reimbursements were tied to an inflated price rather than to what doctors paid.

Yet the government allowed the overpayments to continue because it acknowledged that doctors were underpaid for their practice expenses, such as nurses, equipment and treatment rooms.

Last year's Medicare law decreed that the problem be fixed.

"In the current system, beneficiaries sometimes paid more in co-payments than the physician or supplier paid to acquire the drug," said Sen. Charles Grassley, R-Iowa, an architect of that law.

Reimbursement for practice expenses has increased, although almost all of a temporary 32 percent increase for those costs expires at the end of the year.

Cancer specialists have asked Congress essentially to freeze payments at current levels until various agencies complete studies of the new pricing system. The prospects for a freeze are dim as Republican leaders say no changes will be made in Medicare law this year

McClellan said his agency could adjust reimbursements before making the regulation final in the fall.

The proposed regulations issued Tuesday also would set the terms for introductory physical examinations and other new preventive screenings for Medicare patients; boost payments to physicians in areas with substandard medical help; and increase doctor payments generally by 1.5 percent to an estimated $55 billion next year.

These provisions all were part of last year's Medicare law, which Grassley and other lawmakers had insisted must contain special help for rural Medicare clients.

The law also placed more emphasis on preventive care, including a first-ever physical exam when people turn 65 and join the government-run health care program.

The government will not automatically pay for the physical. Medicare clients must pay the first $110 of nonhospital expenses next year before their benefits begin, according to the proposal. Medicare allots up to $124 for the exam, which includes an electrocardiogram but no blood tests.

The proposal also would cover a cholesterol test once every five years, to screen for cardiovascular problems, and diabetes screening for people considered susceptible.

The physician payment increase for 2005 is mandated by the law, but Medicare put off costly decisions to make permanent changes in doctor compensation. Analysts estimate the changes would cost tens of billions of dollars.