AMA warns Medicare payment cuts would harm patient care and access

An Association survey shows that many doctors would be unable to invest in quality-improving technology and would be forced to cut back on patient services.

By David Glendinning — Posted April 25, 2005

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Washington -- If Congress fails to reverse the impending Medicare payment cut to physicians before the end of the year, J. Edward Hill, MD, worries that the suffering won't be limited just to patients seeking new doctors.

A recent American Medical Association member survey shows that his fears are warranted. Not only would many doctors stop accepting new Medicare patients, but they would be forced to put off investments in their practices that could improve patient care, the poll found.

Dr. Hill, the AMA president-elect and a family physician from Tupelo, Miss., reported that many physicians in his part of the country already are starting to think twice about launching or maintaining disease-management services for existing patients. This relatively new type of program has shown promise in coordinating care for seniors with chronic diseases, often with the help of health coaches who assist patients in managing their conditions between office visits.

"To run a really good disease-management program, you probably need electronics, but you probably also need health professionals to help monitor these patients, and that's expensive," Dr. Hill said. "The concern is that physicians won't be able to run their congestive heart failure disease-management program or their diabetes disease-management program because they can't afford the salaries of more personnel."

This concern is underscored in the AMA member survey, which found that more than half of physicians plan to defer purchases of medical equipment or information technology if they sustain a Medicare cut next year. A comparable number of doctors said they would decrease staffing levels if the 2006 reduction, now estimated at 4.3%, goes through. The number of doctors planning these steps would increase significantly if current law were to remain unchanged and cause multiple years of cuts.

"This is bad news, because new medical equipment and information technology are critical to the kinds of quality improvement that the AMA, the government and America's patients hope for in the years to come," Dr. Hill said. These projections raise the prospect that impending rate reductions could interfere with the Bush administration's plan to improve the care that patients receive.

The Centers for Medicare & Medicaid Services has established disease-management and health care IT as integral parts of the agency's strategy to enhance quality for the growing Medicare population. CMS is trying to encourage physicians to pursue both avenues by launching demonstration projects within the federal program.

But while these special projects try to spread the investment burden by putting some of the financial risk on IT and disease-management firms, doctors who set up programs within their own offices are not receiving any assistance, said Christobel E. Selecky, president of the Disease Management Assn. of America. In such cases, the upcoming Medicare cuts are just the tip of the iceberg when it comes to the flaws of the underlying payment system, she said.

"The whole reimbursement structure needs to be revamped if one is to assume that physicians are going to be hiring health coaches in their offices," Selecky said. "The current system is really meant to reimburse for fee-for-service encounters and not necessarily for the kind of proactive coaching and counseling and support that disease management provides."

Doctors also are preparing to make tough choices about seeing Medicare patients if the 2006 rate reduction occurs. The AMA survey found that almost 40% of physicians would decrease the number of new Medicare patients they would welcome into their practices, while 18% of doctors said they would stop treating some seniors already on their patient rolls.

Even if doctors are able to keep all of their patients, more than half of respondents plan to decrease the time that they spend with each of them. A similar number would begin referring more complex cases to other physicians, while just less than half would stop providing certain medical services altogether.

The figures paint the picture of a medical community that is struggling to maintain its level of care for seniors but that will soon reach the tipping point when it comes to patient access, Dr. Hill said. "That news should send chills down the spines of seniors in Medicare, and it also should be even more alarming for Americans who are about to enter the Medicare program, particularly in the next few years."

The Association is working on Capitol Hill to turn next year's cut into a pay increase and to prevent the following five years of annual reductions by convincing lawmakers that the current reimbursement formula needs to be scrapped.

The AMA also has been attempting to enlist patients in its effort. Since December 2004, the Association has been encouraging its members to mount posters in their offices warning of the upcoming reductions and urging a grassroots response from beneficiaries and their families. The group has not yet made decisions on possible expansions of the poster campaign, lobbying blitzes on Capitol Hill or advertisement buys.

Whatever the strategy, Medicare beneficiaries whose access could be at risk can play an integral part in bringing about a legislative solution, Dr. Hill said.

"We don't want them to lose access to their doctors, because no matter what happens, if they don't have doctors, then the problems are going to be much worse," he said. "What I say to them is perhaps they need to put more pressure on the policy-makers to look at more permanent ways to fix the problem."

Funding a solution may prove tricky in Congress, Dr. Hill conceded. In addition to the fact that even a one-year payment fix would cost billions of dollars, some of the financing would come from increases in seniors' premiums. He nevertheless expressed confidence that lawmakers will find the necessary dollars no matter how tight the budget.

"They come up with money that's not budgeted in this government all the time for things that are urgent or critical or important," he said. "They seem to find the money when the will is there."

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Impact on patients

If pay is cut next year, more than half of doctors plan to trim their Medicare case loads.

  • 38% will accept fewer new Medicare patients.
  • 18% will drop some current Medicare patients.
  • 44% plan no changes/don't know.

Source: AMA member survey, February-March

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Impact on practices

Many physicians plan to make significant changes to their practices if Medicare reduces rates for next year and beyond.

Physicians planning
to make change
One year
of cuts
years of cuts
Defer medical equipment purchase 61% 72%
Reduce time spent with patients 57% 71%
Defer information technology purchase 54% 67%
Begin referring complex cases 52% 64%
Stop providing certain services 49% 71%
Reduce staff 46% 65%
Discontinue nursing home visits 34% 50%
Discontinue rural outreach services 29% 44%
Significantly reduce work load/hours 24% 54%
Close satellite offices 24% 42%
Shift services to hospital 24% 36%
Retire 10% 47%
Stop providing patient care 9% 47%
Relocate 9% 22%
Close/sell practice 8% 43%
Begin working locum tenens 8% 19%

Source: AMA member survey, February-March

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External links

AMA on Medicare physician payment reform (link)

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