Medicare pay bill: Raises to replace cuts through 2009

Washington -- The push to prevent impending Medicare physician pay cuts is being advanced by a new bill that would block such reductions for 18 months.

The legislation, called the Save Medicare Act of 2008, would continue a 0.5% physician pay update for the last six months of 2008 and would institute a 1.8% update for 2009. Physicians are slated to receive a 10.6% cut starting July 1 and an additional cut of about 5% in 2009.

The bill, introduced by Sen. Debbie Stabenow (D, Mich.) on March 13, has been endorsed by the American Medical Association and other physician organizations.

"The year-and-a-half time frame will inject some stability into the system for seniors and physicians forced to make difficult practice decisions because of planned payment cuts," said AMA President-elect Nancy H. Nielsen, MD, PhD. "The time frame will also give Congress time to begin working on a long-term solution to the broken payment system without having to take action to stop the cuts twice in one year."

The AMA supports replacing the current formula with a system in which payment updates reflect increases in the cost of practicing medicine.

Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee, has his own legislative package to address pay cuts and other issues in Medicare. A Baucus aide said the Stabenow bill is "an important contribution to the dialogue we must have about physician payment this spring."

However, the aide said, any discussion that addresses physician payment also should focus on Medicare's deteriorating long-term fiscal condition, should help beneficiaries afford program premiums and out-of-pocket costs, and should be written in a fiscally responsible manner.

Medicare spending is still growing faster than the economy, according to the Medicare trustees 2008 report. One of the biggest problems is that Part A -- which covers hospital, home health, skilled nursing and other facilities -- has enough dedicated funding to cover only 94% of its costs this year. If this trend continues, the $326 billion trust fund supporting Part A will be wiped out by 2019, the trustees said, repeating a warning from last year's report.

Part B, which pays for physician services, is funded adequately every year through general revenues and beneficiary premiums. But as spending continues to grow, Part B will consume an ever-larger portion of general revenues, the report states. The trustees noted that their expenditure projections are likely unrealistically low, because Congress probably will not allow the cuts in physician payment projected for the next decade.

Since 2003, Congress has adopted legislation to prevent physician pay cuts mandated by the formula. However, in more recent years, largely due to the financing mechanisms employed in legislative interventions, the mandated cuts have grown larger and more difficult to avoid under the formula.

Stabenow's bill includes nonbinding language calling generally for Medicare reforms to be handled in a fiscally responsible manner, although it doesn't offer a funding source to prevent the physician pay cuts.

The top Republican on the Senate Finance panel, Sen. Charles Grassley of Iowa, also is concerned about the looming 10.6% physician payment cut. "I'm an advocate for not making it more difficult to recruit doctors in rural America," he said in a radio interview last month. "So I'm going to keep those cuts from happening."

The American Academy of Family Physicians and American College of Physicians support Stabenow's bill. AAFP President Jim King, MD, said his organization's main goal is to replace the payment system with one that makes more sense.

It's difficult to tell how much momentum there is in Congress to prevent the cuts, said Robert Doherty, ACP senior vice president for governmental affairs and public policy.

The Stabenow measure would extend the Physician Quality Reporting Initiative through 2010. Doherty said he would be watching whether lawmakers maintain a separate fund for PQRI bonus payments and other quality programs or if they use funds that would have boosted general Medicare physician reimbursement.

Dr. King was concerned that Baucus' legislation would grow into something too complicated and unwieldy.

Cuts worry Americans

Physicians fear that looming Medicare pay cuts could force them to limit the number of Medicare patients they see or to stop seeing them altogether. They aren't alone in their worries, says an AMA telephone survey of 1,006 adults conducted Feb. 22-25.

Sixty-five percent of Americans are not aware of the scheduled reductions, the poll found. But when told about the cuts, eight out of 10 respondents said they are concerned that access to Medicare would suffer.

Seventy-three percent said Congress should prevent the reductions. The poll has a 3% margin of error.

Stabenow's bill also would continue through 2009 other doctor-supported measures set to expire July 1.

Rural physicians would benefit from a provision continuing Medicare's work geographic practice cost index floor of 1.0. The floor aims to ensure that they are not paid significantly less than urban doctors.

The bill also would maintain a 5% Medicare bonus payment for doctors practicing in underserved areas and would allow physicians ordered into active military duty to engage in substitute billing for more than 60 days.