Government

Medicare pay cut grows to 5.1%; physicians press for legislative fix

The CMS chief warns of rising volume and intensity of physician services but also stresses the need for more preventive care.

By David Glendinning — Posted Aug. 28, 2006

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

When Congress returns from its summer recess in a few days, physicians say it faces a more urgent Medicare reimbursement situation than when it left town.

The Centers for Medicare & Medicaid Services recently announced that the predicted reduction to doctors that will take effect Jan. 1, 2007, is now 5.1%, an increase of nearly half a percentage point over the previous projection of 4.7%. With midterm elections in early November, lawmakers have only a few weeks to reverse this cut before Congress once again departs for final rounds of pre-election day fund raising and campaigning.

Physician groups, including the AMA, are starting to question whether that will be enough time for Congress to tackle what has proven to be a politically and fiscally complex exercise in recent years.

"Seniors who rely on Medicare and the physicians who care for them are stuck wondering if 2007 will be the year access to care erodes as we wait for congressional action to stop the Medicare payment cuts," said Cecil B. Wilson, MD, chair of the AMA Board of Trustees.

The Association wants an overhaul of the entire payment system but at a minimum is calling for legislation that would turn next year's cut into an update that approximates the increased costs to physicians of caring for Medicare patients. CMS puts that figure at roughly 2% for 2007.

If the effort proves too tricky to handle during September and early October, Congress still could ensure that doctors don't face a single day of reduced reimbursements if it returns for a postelection lame-duck session and passes a legislative remedy that meets approval from the White House.

But congressional aides and lobbyists said this would be a tougher way to accomplish that goal, especially if either of the chambers would change control next year as a result of the elections. Lawmakers weary of election-year politics and looking forward to an altered landscape in 2007 might decide to keep many government programs funded at 2006 levels and revisit unfinished business after the new year, they said.

Medicare will issue a final physician payment rule later this year, but the agency doesn't expect the numbers to change much between now and then, said CMS Administrator Mark McClellan, MD, PhD. He noted that without congressional intervention, the administration is unable to change the physician update to prevent the reduction.

When announcing the proposed rule that raised the estimated cut to 5.1%, Dr. McClellan sounded the familiar theme that CMS keeps having to raise its physician spending estimate due to unexpected increases in utilization. When plugged into the payment formula, this drives total expenditures beyond predetermined limits and translates into even deeper reimbursement cuts as time goes on.

"We need to get out of the vicious circle of rapid growth in utilization and spending, and falling real payment rates," Dr. McClellan said. "Physician groups have been working hard to identify better ways to pay -- ways that help them provide higher-quality care without increasing overall health care costs."

CMS believes that not all of the increases in the volume and intensity of physician services are warranted. Although part of a recent surge in office visits could be attributed to use of the new Medicare drug benefit, for example, the preventive benefits of the drugs should be driving down long-term outpatient and inpatient costs if the visits are appropriate, he said.

Because of these developments, the Bush administration is becoming less comfortable with supporting temporary updates that pour more money into the physician payment system without attempting to control the volume and intensity of services that doctors provide Medicare patients, Dr. McClellan said.

CMS now estimates that simply turning the 2007 cut into a freeze that maintains this year's rates would cost the government roughly $13 billion over five years.

The administration has proposed eventually linking payments to the quality of care that doctors provide, but so far Congress has not acted on this call.

At the same time, however, Medicare is following lawmakers' direction by increasing the number of preventive services that it covers, and it is doing so without adjusting the physician pay formula to take into account the expected effect of the new coverage on volume.

Abdominal aortic aneurysm screenings, for example, will be available as a new benefit next year for at-risk beneficiaries who take advantage of Medicare's initial physical exam. Physicians also will be able to order Medicare-covered bone mass measurements for additional numbers of steroid therapy users.

The AMA's Dr. Wilson pointed out the conflict between encouraging more preventive care on the one hand and then punishing doctors for exceeding spending limits on the other.

"Medicare has expanded the treatments it covers more than 90 times since 1999, yet under the current Medicare payment system physicians are penalized with lower payments per service the more care they provide," Dr. Wilson said. "In fact, Medicare currently reimburses physicians about the same in 2006 as it did in 2001."

Worries about imaging

Even if Congress allows the 5.1% cut to go through in January, Medicare still expects to pay roughly $61.5 billion to about 875,000 physicians and other outpatient health care professionals next year.

A recently released CMS plan to pay more starting next year for certain evaluation and management services could mean that some primary care physicians, on average, receive total federal dollars that are the same as or even higher than what they received this year for providing the same amount of services.

But no matter what the specialty, average total rates will not keep pace with the cost of providing care unless lawmakers act. In addition, physicians worry about diagnostic imaging reductions that will come on top of any other cuts that doctors are facing for 2007.

Although CMS has decided to minimize one of the imaging cuts by reducing pay for multiple scans on contiguous body parts by only 25% instead of the planned 50%, Dr. Wilson and other physicians worry that both patient care and Medicare's pocketbook will end up taking a hit in the long run.

"It is important to look not just to the increase in use of such services, but to their ability to provide patients with healthier outcomes, such as using CT scans and MRIs to pinpoint and stage various types of cancer," Dr. Wilson said. "Medicare must differentiate between appropriate and inappropriate imaging use and tailor its policies so that appropriate use is not punished."

Back to top


ADDITIONAL INFORMATION

Bracing for cuts

The proposed changes to Medicare evaluation and management reimbursements, imaging cuts and an across-the-board reduction in physician rates mean that some types of doctors will be getting significantly different levels of federal dollars next year if Congress doesn't step in first. Here's how some specialties would fare, on average, under the upcoming changes. Numbers have been rounded.

E&M Imaging Fee schedule Total
Emergency medicine 7% 0% -5% 2%
Internal medicine 5% 0% -5% 0%
Family practice 5% 0% -5% 0%
Orthopedic surgery -2% -1% -5% -8%
Pathology -5% 0% -5% -10%
Vascular surgery -1% -6% -5% -11%
Anesthesiology -7% 0% -5% -12%
Radiology -5% -6% -5% -16%

Source: Centers for Medicare & Medicaid Services

Back to top


ADVERTISEMENT

ADVERTISE HERE


Featured
Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story


Read story

Goodbye

American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story


Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story


Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story


Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story


Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story


Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story


Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn