AMA makes new demand on Medicare payments

The American Medical Association has made clear that it will oppose efforts to link Medicare payments to higher-quality healthcare services unless Congress and Medicare permanently halt steadily declining payments to doctors.

For the doctors, the clock is ticking. Unless Congress or the Bush administration intervenes, their payments for seeing Medicare patients will be cut Jan. 1 by 4.4 percent.

Physicians and their representatives in Washington have grown increasingly frustrated over the past few years as Congress has failed to repair a Medicare system that calls for smaller and smaller payments each year.

Congress and the Bush administration, meanwhile, have been seeking ways to reduce Medicare spending by promoting more efficient and higher-quality medical care.

Policymakers have given considerable attention to programs known as “pay for performance” or “value-based purchasing” that would give extra money to doctors who improve the care they give their patients.

To determine doctors’ payments, Medicare uses a complex formula that the American Medical Association (AMA) and other groups say does not adequately account for rising costs. Congress has passed several temporary fixes to prevent cuts in recent years but has not moved to replace the underlying formula.

In a letter sent Monday to Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan, AMA Executive Vice President and CEO Michael Maves lays out the group’s demands in clear terms.

“AMA support for a value-based purchasing program is contingent upon repeal” of the formula used to calculate payments and its replacement with a system of annual updates tied to the overall cost of providing care, Maves wrote.

The Congressional Budget Office estimates that such a reform would cost $154.5 billion over 10 years.

Maves also asks for temporary payment increases for 2006 and 2007 and for a new system to be put in place by the following year. Value-based purchasing could then be established in 2009, Maves recommends.

The AMA has forwarded the letter to Congress, a spokesperson said.

In November, the Senate adopted another temporary pay raise as part of its budget-reconciliation bill. Under the Senate-passed bill, physicians would get a 1 percent pay raise next year rather than a 4.4 percent cut.

But the Senate also passed a value-based purchasing program, which could save Medicare $4.5 billion over five years.

The House did not pass language affecting doctors’ payments.

Meanwhile, CMS has been moving ahead with a voluntary program to encourage doctors to submit information on their treatments.

Medicare’s announcement of the program was met by an angry response from the AMA, which complained that the agency was moving ahead too quickly and had disregarded cooperative efforts being undertaken by physicians organizations.