Medicare Payment System Still Broken

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Legislative Affairs Feature – February 2011

Tex Med. 2011;107(2):25-28.

By Ken Ortolon
Senior Editor

Physicians and Medicare beneficiaries breathed a sigh of relief on Dec. 15 when President Obama signed a law delaying a 25-percent cut in physician Medicare payments rates until January 2012. The delay eased their fears of a drastic cut that would accelerate physicians' departure from the Medicare system and leave many senior citizens and military families struggling to find care.

It was the fifth time in a year that physicians and patients had seen Congress stop a fee reduction just days before – and sometimes after – it was to take effect. After freezing Medicare rates for two months on Dec. 19, 2009, Congress further delayed the reductions in March, April, June, and November of 2010 before enacting the one-year freeze on Dec. 9, 2010.

Both the Texas Medical Association and the American Medical Association praised the freeze, but said it's not enough.

"Even though it's just another temporary patch, the 12-month reprieve that physicians will have in 2011 from the threats of frequent cuts and stoppages in payment will make the Medicare system more secure for the next year," said TMA President Susan Rudd Bailey, MD. "And patients will not have to dwell with that month-to-month fear that their doctor might now be there for them."

Dr. Bailey urged Congress to find a permanent solution "to fix the10-year-old problem" in 2011. "Nothing is more frightening than to be sick and to not know if you can get the care you need. More than 3.3 million Texas seniors, people with disabilities, and military families deserve a sustainable health care program – one they can depend on."

The one-year postponement of fee cuts may give some sense of stability in the Medicare system through 2011, but an even larger reduction – 30 percent – is coming in January 2012 if Congress doesn't pass another temporary freeze or eliminate the Sustainable Growth Rate (SGR) formula, under which Medicare payments are established.

TMA and AMA officials say they hope a long-term solution can be found before then, but they acknowledge that the new Congress, which includes dozens of new conservative, deficit-conscious members who are intent on cutting federal spending, will create a serious obstacle.

 TMA will continue to work for a permanent solution to the Medicare fee fiasco in 2011 and stop the meltdown of the Medicare system.  

Meltdown Continues

The Medicare and Medicaid Extenders Act of 2010 freezes most Medicare fees at current levels until Jan. 1, 2012. The measure is estimated to cost $14.9 billion. It will be paid for over 10 years by raising the caps on how much individuals and families must return to the government if they receive overpayments from health care affordability tax credits created by the health system reform law.

In addition to delaying the pay cuts, the new law also extends the mechanism for adjusting payment rates based on geographic differences in the cost of care, extends increased rates for ambulance services, and increases payments for some mental health services by 5 percent.

The bill passed in a rare show of congressional bipartisanship, clearing the Senate unanimously on Dec. 8 and passing in the House by a vote of 490 to 2 the following day.

Even so, some physicians say the uncertain Medicare climate of 2010 had a significant negative impact on access to care for Medicare patients.

Dr. Bailey says the ongoing threat of sharply reduced fees prompted a record number of physicians to bail out of Medicare altogether this year. And a number of Texas physicians also took steps to limit their Medicare patient population or reduce services in anticipation of the huge cuts.

"There was tremendous uncertainty, and I think it accelerated the exit of some physicians from the Medicare program altogether," Dr. Bailey said. "We had a record number in 2010 actually completely opt out of the system. Basically, it was just a recurring crisis point all year long."

In a TMA survey last March, 19 percent of physicians said they limited the acceptance of new Medicare patients in their practice, while another 16 percent said they intended to do so.

Meanwhile, 33 percent of physicians in the survey said they were limiting new Medicaid patients, and 14 percent said they were taking no new Medicare patients at all.

Other physicians said they delayed the purchase of health information technology, reduced staff wages and benefits, and took a number of other actions. Four percent of Texas doctors surveyed said they terminated their Medicare participation, and an additional 3 percent said they planned to do so.

Agonizing Decisions

Abilene otolaryngologist Austin I. King, MD, is one of those who have begun to limit new Medicare patients he sees because of the uncertainty over Medicare payments. He accepts only two new Medicare patients per week

"It's so up in the air what they're going to do," Dr. King said. "There's no way you can buy new equipment or really plan anything."

Dr. King says he is fortunate to practice a specialty in which he can tailor his patient population to some extent. Other specialties, such as ophthalmology, neurology, and internal medicine, don't have that flexibility.

He also says that he "really agonized" over the decision to limit his Medicare practice.      

"For people who are of Medicare age, this is not an entitlement program. They've paid in to the hospital side, and they're paying premiums for the physician side," Dr. King said. "These are the people who won World War II and brought prosperity to America, and it breaks your heart to have to do that. But we have to keep our offices open."

In Athens, family physician Douglas W. Curran, MD, says cutting his Medicare patient population is not an option.

"Our dilemma is that in small communities you just can't do it because you're going to see them in the office or you're going to see them in the emergency room," he said.

Instead, his 11-physician group practice laid off five staff members – about 10 percent of its employees – and likely will not make a $250,000 investment in a new mammography machine to replace outdated equipment.

"We've just decided that we're probably not going to continue to do mammography in our office facility because we're not confident that the payment is going to be consistent where we can cash flow that," said Dr. Curran. "And that affects patient care. When a patient has to go down the road to get a basic test, then I think they're less likely to get that test. And it's certainly much more inconvenient for them."

Both Drs. King and Curran say the delay in the pay cuts will not prompt them to reverse their decisions because the uncertainty over future Medicare payments has not gone away.

While Needville family physician Art Klawitter, MD, says his practice avoided limiting new Medicare patients, he has seen other physicians in his area make some extreme practice changes. At least two have gone into concierge medicine, he says. "I think those are pretty drastic moves for people who are used to fee-for-service medicine."

Predicting the Future 

With the pressure off Congress for another year, Dr. Bailey is "cautiously optimistic" that Congress and the Obama administration will be able to craft a permanent fix to the SGR problem in 2011.

And there is some indication that bipartisan support might exist to make that happen. In comments following passage of the delay, House leaders from both sides of the aisle – including House Energy and Commerce Committee Ranking Member Rep. Joe Barton (R-Texas) – indicated a commitment to work with stakeholders and opposition leaders to find a permanent solution.

"I know that it's going to be expensive. I know that it's going to be difficult," Representative Barton said. "But it will be possible."

Shortly before Congress passed the freeze, President Obama said it is "time for a permanent solution that seniors and their doctors can depend on, and I look forward to working with Congress to address this matter once and for all in the coming year."

But TMA officials say the new makeup of Congress could be a major roadblock to a permanent SGR solution.

"You're looking at a permanent fix costing in the $350 billion range, and a lot of individuals who got elected this last cycle are going to Congress specifically with the idea of cutting spending," said Darren Whitehurst, TMA vice president for advocacy.

"It's going to be a tough road, there's no question about it," added Dr. Bailey. "But this may be our last chance."

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 e-mail.

All articles in Texas Medicine that mention Texas Medical Association's stance on state legislation are defined as "legislative advertising," according to Texas Govt. Code Ann. §305.027. That law requires disclosure of the name and address of the person who contracts with the printer to publish the legislative advertising in Texas Medicine: Louis J. Goodman, PhD, Executive Vice President, TMA, 401 W. 15th St., Austin, TX 78701.

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