Pre-election push on to fix Medicare payment

Washington -- The American Medical Association is urging lawmakers on Capitol Hill to reverse next year's Medicare physician pay cut before Congress adjourns for the mid-term elections. This effort is occurring against a backdrop of rising federal spending and beneficiary premiums.

The AMA has called on lawmakers to turn next year's projected 4.7% reimbursement reduction into an increase before they leave town in October. Eighty senators signed onto a July 17 bipartisan letter to Senate leadership backing this call to action.

"Physicians are the foundation of the American health care system," the lawmakers wrote. "A stable payment structure for physician services is critical."

A mid-year budget review released by the White House just days before the letter came out, however, concludes that Medicare is spending more on physician services as time goes on even without taking reimbursement rates into account. The Bush administration's projection of what Medicare will spend on doctor care in the next five years now stands at just over $1 trillion, an increase of $30 billion over its estimate from February. The change is largely due to an unexpected jump in the number and complexity of services that doctors are delivering.

"This rapid growth in services administered in physicians' offices is driven by more use of more intensive physicians' services, including imaging, physician-administered drugs, minor procedures, physical therapy, dermatology, lab tests, and evaluation and management services," CMS said in a fact sheet accompanying the budget review. "Use of many of these services varies substantially across practices and geographic areas, with no clear impact on patient health."

But the health effects are clear to physicians, said AMA Board Chair Cecil B. Wilson, MD. He cited increased life expectancy and decreased deaths due to chronic conditions as two signs that Medicare's increased funding of care is worth the price.

"We know that spending on physician services is a good investment," he said. "Preventive care and management of chronic diseases by physicians have contributed to longer, healthier lives for America's patients."

The report underscores the need not to cut spending on physician services but to fix the system that pays doctors less when they provide more needed care, Dr. Wilson said.

CMS has acknowledged that the reimbursement system needs reform but has called for payments eventually to be linked to the quality of the care provided, not just the quantity.

More pressure on seniors

Medicare's pocketbook is not the only one impacted by increasing levels of physician services and efforts to pay doctors more for care they provide.

CMS announced in its report that Medicare Part B premiums for beneficiaries would rise by nearly $10 per month in 2007 to $98.40, roughly 11.2% more than what they are paying now. This "substantial" increase also is due in large part to the jump in the volume and intensity of services that doctors administer, CMS said.

The situation places more pressure on lawmakers hoping to boost physician reimbursements next year. Any increase in physician pay will mean beneficiary premiums that are even higher next year, threatening to raise the monthly amount over the $100 mark. If physician payment is revised after the 2007 premium becomes final later this year, the 2008 premium is likely to increase substantially to help pay retroactively for the update.

Dr. Wilson noted that many seniors and disabled people will not pay the full monthly amount and that lower premiums will be of no help to beneficiaries if declining reimbursements force doctors to stop seeing them. "For low-income patients, there is extra assistance, so they will pay little or no Medicare premiums, and one out of four Medicare patients will pay no premium at all," he said. "Continued access to physician care for seniors is critical if we want to continue on the good news curve of longer, healthier lives for Americans."

A recent report from the Government Accountability Office concluded that despite a 5.4% cut in Medicare physician reimbursements in 2002, fears that access to physician care would suffer as a result did not materialize. Between April 2000 and April 2005, the number of physicians billing Medicare and the proportion of services for which Medicare payments were accepted as payment in full actually increased, the GAO said.

But the AMA warned the GAO not to infer from the treatment statistics that beneficiaries had experienced an increase in access even after physicians sustained the 2002 reduction. The numbers may have been skewed because more seniors and disabled people became sicker, sought care in the physician's office that they previously would have gotten in the hospital or took advantage of new Medicare benefits, the Association said.

Many physicians who decided to keep seeing Medicare patients despite the payment reduction might not continue doing so if they sustain another cut. Roughly 45% of doctors surveyed in March by the AMA said they would reduce the number of new Medicare patients they accept or would stop seeing them altogether unless Congress prevents the January cut.

Racing the clock

The clock is ticking for doctors and their Capitol Hill supporters. Congress will return from a monthlong summer recess at the beginning of September, leaving precious few weeks before both houses adjourn for the mid-term elections.

Congress also is working to pass the federal appropriations bills for the fiscal year that begins Oct. 1. If lawmakers and the White House are unable to approve a Medicare update for physicians before the November elections, they might be able to do so before the end of the year if Congress returns for a lame-duck session.

Some congressional aides and lobbyists have predicted that such a session will occur. This would allow lawmakers to put together an omnibus bill incorporating all of the unfinished business from the year. But attempting to attach a pay fix to such a legislative vehicle would force physicians to compete with any other federal funding issue that is trying to hitch a ride, they said.

In the meantime, doctors will need to make decisions before the end of December about whether they will participate in Medicare next year, a quandary that could have far-reaching effects, AMA Trustee Jeremy A. Lazarus, MD, said at a recent Association event in Florida.

"In just five years, the first wave of baby boomers will age into Medicare when they turn 65," he said. "Congress needs to take a long, hard look at the future of Medicare and take action to preserve access to care for this generation of seniors -- and those to come."