By Susan Kreimer, MS, contributor
March 11, 2010 - On Wednesday, March 10, the U.S. Senate voted 62-36 to approve a $138 billion jobs bill that would temporarily avert a 21.2 percent cut in Medicare reimbursements to physicians, while extending federal Medicaid assistance and COBRA premium subsidies. The House approved its own $154 billion jobs bill in December 2009. One day before the Senate vote, House Ways and Means Committee Chair Sander Levin said the House might require a conference committee with the Senate to reconcile the chambers' bills.
The latest action pushes the effective date of the potential Medicare cuts back to October 1, 2010, which should come as a relief to physicians who had been told that the cuts would take effect on April 1. Many had been holding out hope for yet another temporary reprieve to the scheduled reduction in Medicare Part B payments, and are pushing for a more permanent solution.
A number of experts contend that the reimbursement rules – based on a formula calculated by the Centers for Medicare & Medicaid Services (CMS) – are flawed.
This sustainable growth rate (SGR) formula has mandated major annual cuts for most of the last decade. Leery of more postponements, physicians are now seeking a permanent solution.
The reduction was originally slated to affect services on or after Jan. 1, 2010, but Congress has stalled it three times now through legislation.
J. James Rohack, MD, president of the American Medical Association (AMA), wrote a letter to the U.S. Senate on March 5, imploring legislators during the latest one-month delay to repeal the broken payment formula once and for all.
The correspondence states that the AMA “cannot support proposals that aim to address only the most imminent threat to payment levels and patient access, with no regard for the future of the Medicare and TRICARE (military health care) programs. We are opposed to further short-term patches of any duration.”
The SGR formula, adopted in the Balanced Budget Act of 1997, has not lived up to its founding premise – controlling healthcare costs. Instead, it has thrown doctors in a quandary, said Lori Heim, MD, president of the American Academy of Family Physicians.
“Every year that the cost to the government exceeds what is predicted by the formula, then that amount in the subsequent year is supposed to be deducted from the payment to all physicians,” said Heim, who practices in North Carolina.
The payment issue relates to all physician services, whether performed in the office, hospital or other setting. In addition, nurse practitioners, physician assistants and mental health professionals would incur pay cuts under the formula, since all are paid according to the same Medicare fee schedule.
“We have no discretion to set a different update from the one that is derived from the statutory formula,” said CMS spokeswoman Ellen Griffith.
On October 30, 2009, CMS announced final changes regarding services to be provided in 2010 by more than one million physicians and nonphysician practitioners under the Medicare Physician Fee Schedule (MPFS). The schedule pertains to payment rates for more than 7,000 types of services.
“The Medicare pay cut is the ‘Sword of Damocles,’ constantly hanging over our heads,” said Craig Czarsty, MD, a Connecticut physician who is chair-elect of the American Board of Family Medicine.
Amid the ongoing threat of cuts, Czarsty has pondered what he would do if it becomes reality. He probably will stop taking new Medicare patients, and he predicts that many other physicians will respond likewise.
“Those who work for larger groups or hospital systems may be insulated for a while, but ultimately, it will affect them, too,” Czarsty said.
For elderly patients, “it may drastically reduce their ability to find a physician, and in some areas of the country, it is already difficult enough.” Even longer lines will form at emergency rooms as seniors feel compelled to visit them for acute illnesses. In some cases, their chronic conditions may suffer from inadequate monitoring.
Peter Hollmann, MD, also anticipates that many physicians would immediately stop accepting any new Medicare patients while evaluating their options to end participation in the program. They may choose to only handle emergencies, said Hollmann, a Rhode Island physician and chairman of the public policy committee at the American Geriatrics Society.
Medicare cuts also could accelerate the rate of doctors seeking employment with institutions not facing such reductions. Institutional subsidies may keep open the doors of a practice that otherwise could not survive.
“This only exacerbates an imbalance of power, when, as a society, we need hospitals and other institutional providers working more closely with direct care professionals in a true shared governance model to improve quality and efficiency,” Hollmann said.
Operating a physician practice becomes cumbersome without some sense of anticipated revenue. The uncertainty makes it difficult to foresee adding or laying off staff, buying new equipment, expanding office space and borrowing working capital, said Greg Kwasny, MD, chairman of the health policy committee at the American Academy of Ophthalmology.
“A lot of practices are ‘closed’ to Medicare patients while still accepting others as a way of balancing the payments,” said Kwasny, an ophthalmologist in a suburb of Milwaukee, Wisc.
“Ophthalmologists, in particular, are not able to do this, since two-thirds to three-quarters of our practice deals with diseases that affect the elderly,” he added, citing macular degeneration, cataracts, glaucoma and diabetic retinopathy as the most prevalent with age.
If the Medicare reduction goes into effect in October, or anytime soon, Kwasny is at a loss as to what he will do. “A 20 percent cut would pretty much put me out of business,” he said. “I'm a ‘boomer’ and could retire, but I don’t want to.”
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