Physician Payment System Needs More Than a Band-Aid

Is anybody else out there tired of talking about this?  Over the next nine years, doctors participating in Medicare will face payment cuts of approximately five percent per year.  Everyone on the Hill has heard this message again and again - both in the past few weeks and in previous years. It keeps coming up, we keep putting a band-aid on it, and somehow we're always surprised that it comes back to haunt us.

I would like to actually fix this.  Call it the physician in me, but I want it to heal and go away.  And the problem itself is pretty simple; we can do this.  Right now the Medicare physician payment system pays doctors less when they overspend their SGR limit.  It's punitive.  And when doctors get paid less per patient, they first increase the number of patients they see to try and make ends meet - quality suffers - and eventually they leave the system.  We aren't talking about fat cats here, we're talking about working men and women who come out of school with a load of debt and a genuine desire to help people.  Doctors don't want to refuse patients, but simple economics is forcing them to do that, despite what the AARP may believe.

They will keep the patients they have now if they can, out of responsibility and friendship, and they will stop accepting new ones.  It is already happening.

H.R. 5866, the Medicare Physician Payment Reform and Quality Improvement Act of 2006, is my proposed solution.  It repeals the SGR and replaces it with MEI minus 1% in order to create a more market-based approach to physician payment, and place more value on actual cost inputs and not an arbitrary volume-of-services target each year.   The bill also establishes a voluntary quality reporting system, which involves the QIOs, but is based on measures developed by physicians within their respective specialty groups.

There are multiple reasons for this.  First, the SGR is what keeps digging this hole for us.  As medical services are more and more utilized, physicians outgrow their SGR imposed limit, and the payment cuts get bigger.

It doesn't make any sense.  So let's get rid of it.  I suggest MEI minus 1%, as I said, to create a more market-based approach.  I think physicians should be paid what the market says their services are worth.  However, I am well aware that Medicare is an enormous government program and cost is important.  CBO has reported that a full inflation update to physician payment would cost more than $200 billion over 10 years.  Hence, the minus 1% is an attempt to control spending.

Along those lines, I am also actively seeking offsets to pay for these changes.  Redirecting the stabilization fund from the Medicare Modernization Act would provide part of the funding.  Eliminating double payment from Medicare for indirect costs of medical education is another source.  As incentive to report performance measures, participating physicians will be permitted to balance bill certain high income Medicare beneficiaries.

Medicare is already planning implementation of means testing - so prices will be changing, regardless.  My bill not only encourages physicians to self-evaluate and improve their services, it gives patients the financial leverage of comparison shopping for medical care.  If they want to pay more for quality, who are we to stop them?  We're Americans here; bring on the free-market competition for low prices and stop rationing services.

Finally, one of the key components of my bill is that it calls for the ongoing examination of Medicare funding.  Right now, each part of Medicare is an independent financial institution, but they provide related services.

To optimize our spending, we need to know how cross-subsidization could occur between Part A, B, & D related services of Medicare without decreasing access to care.  We need to know whether or not spending in outpatient services and prevention results in savings in hospitalizations, because that spending would be both necessary and worthwhile.