Physicians issue warning over Medicare pay cut

With the number of legislative days dwindling and a stiff Medicare pay cut on the horizon, interest groups representing physicians are again warning that lower rates will cause doctors to treat fewer beneficiaries.

With the number of legislative days dwindling and a stiff Medicare pay cut on the horizon, interest groups representing physicians are again warning that lower rates will cause doctors to treat fewer beneficiaries.

Groups such as the American Medical Association (AMA) sound this alarm every time Medicare’s complex and much maligned payment formula calls for a cut in their fees, as it has for several consecutive years. For 2007, doctors seeing Medicare patients will get paid 5.1 percent less than this year if Congress does not act.

Lawmakers generally agree that the 14-year-old payment formula is flawed and have managed in the last four years to cobble together fixes that have blocked the cuts for one or two years. But doctors’ groups note that the payment freezes or small increases have not been enough to keep pace with the escalating cost of doing business.

Many in Congress and the Bush administration are skeptical of the physician lobby’s claims that doctors will abandon Medicare in the short term.

“Medicare’s a hard program to walk away from,” said one House Democratic aide. Medicare patients make up a large share of many doctors’ caseloads, and, therefore, income.

Each year, when the physician groups issue surveys showing that doctors report that rising expense and lower payments would force them to see fewer Medicare patients, government officials counter with studies of their own demonstrating the contrary. The Government Accountability Office, the Medicare Payment Advisory Commission and the Congressional Budget Office (CBO) have all released such research in the last several years.

The physician groups’ “argument has always been compelling from a long-term perspective,” said Joseph Antos, a healthcare scholar at the conservative American Enterprise Institute, but that evidence has not shown that doctors see fewer Medicare patients because of rising costs and nearly flat payments.

In a brief published last week, the CBO noted, “More than 90 percent of physician and non-physician providers agree to participate in Part B, and surveys generally show that beneficiaries do not experience significant difficulties in getting access to care.” Medicare Part B covers physician services and other care other than in hospitals.

Physicians focus on the threat that lower payments would make it harder for Medicare beneficiaries to get healthcare services for political reasons, Antos commented. “It’s kind of the only argument they think will tug at political heartstrings,” he said.

This week, the Medical Group Management Association (MGMA) released findings of a survey of its members on how they would react to the 5.1 percent cut next year. Thirty-nine percent said they would limit how many Medicare beneficiaries they treat and 19 percent said they would not accept new patients on Medicare. The MGMA represents the managers who run physician offices, not the physicians themselves.

Physicians’ offices can take more subtle actions than to refuse flatly to take on new patients or abruptly cut off existing ones. For example, physicians could make Medicare beneficiaries wait longer for appointments or stop treating troublesome or sicker patients that are less profitable. These doctors would still be included on Medicare’s rolls but would be less accessible to beneficiaries.

Left unchecked, next year’s 5.1 percent cut will be followed by more cuts, the AMA and its allies say.

The CBO observes that the long-term consequences of lower payments could be bad for beneficiaries. The level of access “may change if payment rates are significantly reduced, as will occur over the next several years” as the law stands.

Some on Capitol Hill are beginning to agree. “Seven or eight years of 5 percent cuts would absolutely affect access,” said the House Democratic aide.

Problems with the payment system and the relatively small increase in recent years might be inching Medicare closer to a point where beneficiaries have trouble finding a doctor, said a spokeswoman for House Energy and Commerce Committee ranking member John Dingell (D-Mich.).

“Stabilizing physician payments would help alleviate concerns about access to care,” Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said in a written statement.

“It’s important that Congress act to prevent deep cuts to the Medicare physician fee schedule, to provide a measure of financial predictability for Medicare providers,” a spokeswoman for Finance Committee ranking member Max Baucus (D-Mont.) wrote in an e-mail.

Lawmakers are negotiating with the doctors’ lobby on a temporary fix that most likely would be included in an omnibus appropriations bill advanced during the lame-duck session following the midterm elections.

But some, such as Ways and Means Committee Chairman Bill Thomas (R-Calif.), also want the physicians to agree to take the first steps toward a comprehensive revamping of the system that would include financial incentives for doctors to improve the quality of their medical care.

Lawmakers want to stabilize the payment system while introducing mechanisms that also could slow the growth in Medicare spending.

Without savings, a one-year freeze in payments would cost $10.8 billion over five years. Permanently replacing the formula with one that pegs payments to inflation would cost $58 billion over five years, according to the CBO.

The physician lobby is cautious about a “pay-for-performance” system that would mean some doctors being paid relatively less.

The AMA has been engaged in an aggressive outreach and advertising campaign this year to win public support for the higher payments, an approach they have employed in the past.

Ads have targeted geographic areas represented in Congress by the major Republican players in Medicare legislation. The group staged a “fly-in” of physicians into Washington this week to meet with lawmakers and staff, and today will hold a press conference with other medical groups to unveil a new ad and promote its “grassroots” efforts.

The AMA changed its strategy on polling this year, as well. Rather than surveying physicians to ask them how they would react to lower payments, the AMA asked the general public about the issue.

In a survey released last week, the AMA said that although about 70 percent of people did not know that doctors’ Medicare payments were going to be cut, when they were informed about it, 86 percent expressed concern about beneficiaries’ access to care.