When will Medicare payment cliffhangers end?

July 4, 2008

Medicare and reimbursement cuts affect doctors

For years, physicians' livelihoods have been held hostage to a convoluted government formula called the sustainable growth rate (SGR), which uses the gross domestic product to calculate annual Medicare payment updates.

Democrats, Republicans, the AMA, and dozens of medical societies agree that this system unfairly penalizes doctors, jeopardizes patient access to care, and is broken beyond repair.

Each year since 2002, in a now recognizable ritual, Medicare announces pay cuts for doctors. Organized medicine then protests that physicians can't afford to treat new Medicare patients. Finally, Congress rides to the rescue at the last possible moment to rescind the cuts, kicking the problem down the road until the following year.

Promises of reform are abundant, but the SGR lingers on.

Spokesmen for the presumptive presidential nominees have criticized the SGR and expressed sympathy for doctors, but have not proposed any specific solutions. Both say that physician pay under Medicare must be part of an overall reform of the healthcare system. In other words, the message to doctors is: Don't hold your breath. No matter who wins the election in November, an epic and probably bitter legislative battle will ensue before anything-much less systemwide reform-occurs. And physician pay won't be at the top of the priority list.

It should be, though, because a lot more than doctors' income is at stake.

"There's no doubt that the Medicare cuts will hurt seniors as physicians are forced to make practice changes to keep their doors open," Cecil B. Wilson, a Winter Park, FL, internist and chairman of the AMA's Board of Trustees, testified before Congress in May.

According to a 2007 AMA survey of 8,955 physicians, 77 percent will limit the number of new Medicare patients they accept if fees are cut by the projected 40 percent over the next eight years. Moreover, two-thirds of physicians say they'll defer purchasing health information technology in order to keep costs down.

The ramifications of the cuts are drastic. Two thirds of the survey respondents say they'll begin referring complex cases if the projected cuts go into effect, 54 percent won't be able to meet their payrolls and may have to lay off staffers, and 14 percent could stop providing patient care entirely.

The SGR has essentially kept Medicare payment rates at 2001 levels, while average practice costs have risen 18 percent since then. This payment formula neither rewards doctors who practice cost-effective medicine nor penalizes those who don't.

Relief is urgently needed, but Congress needs to do more than make another Band-Aid fix that requires physicians to plead for rescue 18 months from now. The crisis in physician payment is real and causes patients to suffer. The time to truly fix the SGRscrap it altogether-is now.