Begging for Shekels

Physicians Again Urge Congress to Stop Medicare Pay Cuts

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Legislative Affairs Feature - December 2006

By  Ken Ortolon
Senior Editor

It's an annual ritual. Every year, the formula that sets Medicare physician fees, the Sustainable Growth Rate (SGR), reduces physician payments. Every year, physicians beg Congress to create a more equitable payment system. And every year, Congress puts a Band-Aid on the problem.

"It's like the swallows coming back to Capistrano," American Medical Association President William Plested, MD, told participants at Texas Medical Association's Fall Conference in September. "Every year, here we are groveling before the legislators, begging for a few shekels to try to keep our offices open."

This year is no different. Unless Congress acts this month, Medicare fees will be cut 5.1 percent on Jan. 1. With less than a month left in the current session of Congress, there is little chance lawmakers will permanently fix the SGR this year, but those close to the debate say Congress may again halt the projected cuts, possibly in favor of a small increase in each of the next two to three years.

AMA, however, says physicians need an increase that at least will let them keep pace with rising operating costs.

Former TMA President Bohn D. Allen, MD, warned the Texas congressional delegation in September that low fees are causing physicians to drop out of Medicare or limit their Medicare business to existing patients. He says Congress must realize that continued SGR cuts will cause "a major crisis in access for Medicare beneficiaries." 

Recurring Nightmare

Since 2002, Congress has had to act every year to stave off an automatic SGR-driven fee cut. A 4.4-percent reduction actually took effect in January 2006 before Congress overrode it and froze fees at 2005 levels.

And, if Congress doesn't act again, the situation will just get worse. The U.S. Centers for Medicare & Medicaid Services (CMS) estimates that fees will be cut 37 percent over the next nine years if the SGR remains in place.

The problem, physicians say, is that the SGR attempts to reduce utilization of Medicare services by cutting physician fees, while ignoring factors that actually fuel utilization growth, such as improved medical care, new cures, longer life, and a growing elderly population. As spending increases because of higher utilization, the SGR forces fees downward to keep spending within acceptable limits.

Earlier this year, U.S. Rep. Michael Burgess, MD, (R-Texas) introduced legislation to scrap the SGR in favor of annual updates equal to the Medicare Economic Index (MEI), which measures medical practice cost inflation, minus 1 percent.

AMA and TMA applauded the proposal, although both believe physicians need an increase that fully covers rising practice costs. However, Congress has been slow to act on the Burgess bill, even though there appears to be growing support for an SGR fix.

During his Washington trip, Dr. Allen and TMA lobbyists met with 30 members of the Texas congressional delegation. "To a person they all agreed that physicians are getting the short end of the stick and that something needs to be done," Dr. Allen said.

The problem is that a permanent SGR fix is very expensive and the Republican majority has been reluctant to act on anything that might add to the federal deficit, particularly in an election year.

"The long and the short of it is Congress does not have the political will to do what it takes to fix the SGR because it will take about $25 billion to $28 billion to fix it for the next two or three years, and it will take about $250 billion to fix it over the next 10 years," Dr. Allen said. 

Wait Till Next Year

With time running out in this Congress, attention has turned to another temporary fix to avert the scheduled January cut. Several proposals would give physicians a 0.5-percent to 1-percent increase for 2007. Most also would grant another fraction of a percent increase to physicians willing to voluntarily report certain quality and performance measures.

Dr. Plested says AMA has turned down those deals. "We think at the very minimum we've got to have an increase that equals the increase in the cost of doing business," he said. "We've got to have a cost-of-living increase in order to keep doing what we're doing today. And we've got to have a promise that [Congress] is going to fix the SGR."

He says Congress' failure to permanently fix the SGR sends physicians a "crystal clear" message: "We are going to cut until you refuse to see Medicare patients because it will bankrupt you."

U.S. Rep Joe Barton (R-Texas) laid out another suggested temporary fix in September. Representative Barton, chair of the House Energy and Commerce Committee, proposed giving physicians a 0.5-percent increase in each of the next three years, with an additional 0.25-percent increase for voluntary reporting.

He says the current physician payment system needs to be scrapped.

"It doesn't work. We can't fix it. We can't put another Band-Aid on it like we've been doing," he said. "We keep coming back every year to try to provide a one-year override and, because of the way the current system is structured, every year we do that, we just dig the hole deeper for next year. We're spending billions of dollars each year and we're getting further behind. It's time, in my opinion, for real reform and real change."

Josh Martin, legislative director for Congressman Burgess, says he believes Congress will act before the end of the year to cancel the 5.1-percent cut. He says the Barton proposal is probably the most likely vehicle for doing that.

"I think the concept is sound in terms of give us a period, a window to actually work with," he said. He says that window will give officials at CMS, the Department of Health and Human Services, and the Medicare Physician Advisory Committee time to work out "a more stable and rational way to pay doctors."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at  Ken Ortolon.  

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