Out of time: Medicare pay revisions on hold until after November elections

Washington -- Congress left town to prepare for midterm elections without agreeing on a way to stop the upcoming Medicare physician cut -- a situation that doctors said must be rectified as soon as lawmakers come back to Washington, D.C., in November.

"The AMA is disappointed that Congress is heading home for the elections without passing legislation to prevent Medicare physician payment cuts that will seriously erode seniors' access to health care," said American Medical Association board Chair Cecil B. Wilson, MD. "Congress needs to act promptly on its return to preserve seniors' access to care."

The last chance physicians will have to prevent the estimated 5.1% cut from taking effect in January 2007 will occur after lawmakers go back to Capitol Hill the week of Nov. 16 for a "lame duck" session. Competition among legislative priorities, including stopping the Medicare pay cut, will be fierce, because Congress also must approve a number of massive spending bills if it wants to keep the government running.

If the elections prove particularly contentious or if control of one or both of the chambers switches parties, the push to reverse the reduction -- or to pass any legislation that is not a government spending bill -- could become even more difficult, congressional aides and lobbyists said. Party leaders may resist certain pieces of legislation because they anticipate having more control in the 2007 session or because they are reluctant to allow the other party to claim legislative victories after the elections.

But the move to head off the physician cut has the support of many lawmakers on both sides of the aisle. Separate letters calling on congressional leaders to bring up legislation reversing the reduction were endorsed by 80 senators and 265 representatives.

In addition, physicians received a pledge of action from at least one influential committee leader before Congress recessed.

"I am prepared to repeal the [physician pay formula]. I am prepared to put on the table a multiyear approach that holds physicians harmless at a minimum and provides some incentives for some additional payments based on what physicians themselves voluntarily do to advance quality and efficient health care," said House Energy and Commerce Committee Chair Joe Barton (R, Texas), at a Sept. 28 hearing of the health subcommittee. "I am 100% committed to enacting legislation this year -- we're not talking about something for next year."

A new plan on the table

Barton has floated a legislative proposal that would guarantee physicians a Medicare pay update of at least 0.5% at the beginning of each of the next three years, instead of the roughly 5% annual cuts that they are expected to receive. Doctors also could receive an additional bonus payment of 0.25% in 2008 and 2009 if they participated in a local utilization management program and in at least one of a number of federally approved quality improvement efforts.

The quality improvement prerequisite could consist of participating in Medicare's voluntary quality reporting program, reporting at least three structural quality measures or enrolling in a yet-to-be crafted "medical home" demonstration project that focuses on coordination of patient care.

While this temporary fix is in effect, the Health and Human Services Dept. would be tasked with submitting to Congress by 2008 a permanent plan to replace the reimbursement formula in a way that boosts physician pay but also advances high-quality care and controls growth in the volume of Medicare physician services. Barton said he had not yet settled on the best way to do that but had determined that the formula must go.

"I think it's kind of funny money anyway," he said. "It's an accounting mechanism, and I think we can wipe that off the books and then start from scratch."

His plan is not the only one in play on Capitol Hill. House Ways and Means health subcommittee Chair Nancy Johnson (R, Conn.) and several other lawmakers on both sides of the aisle have suggested their own ways to head off the next few years of cuts and pave the way for implementing a long-term solution. But the Barton proposal gained the most attention from doctor groups.

Dr. Wilson, who testified at the hearing alongside representatives from seven other physician organizations, said the best solution would be a combination of elements from Barton's short-term plan and that of Johnson, who has proposed a long-term way to replace the current formula.

One major way to improve the Barton plan would be to cut the number but increase the size of the temporary pay boosts, the AMA board chair said. The 0.5% increases the congressman is proposing would not keep track with the estimated increases in the costs of providing care to seniors.

"Instead of three years of modest updates, we urge modification of the proposal to include two years of higher updates that reflect practice cost increases," Dr. Wilson said.

Either way, the plan would require new federal funding and likely would mean cuts in payments to other Medicare participants, said Rep. Charles Norwood, DDS (R, Ga.). He suggested that Medicare managed care organizations would be a likely target for reductions to pay for the billions of dollars that would be necessary to boost doctor pay.

But such difficult tradeoffs are a relatively small price to pay to keep physicians in the Medicare program who otherwise might drop out, Dr. Norwood said. He supports keeping the temporary fix to two years and guaranteeing doctors a 1% minimum raise in 2007 and 2008. The strong call to action is a demonstration that lawmakers are serious about tackling the problem of the January cut even if it takes weeks more to get there, he said.

"You heard my chairman, and he doesn't tell a story," said Dr. Norwood, who serves on the Energy and Commerce Committee with Barton. "He's committed to getting this thing done before Christmas, and it's alright with me if it's Christmas Eve if that's what it takes."