Here we go again: Same SGR song, newest verse

A message to all physicians from AMA President William G. Plested III, MD.

By William G. Plested III, MDis a thoracic and cardiovascular surgeon from Brentwood, Calif. He served as AMA board chair during 2003-04, and as AMA president during 2006-07. Posted Oct. 16, 2006.

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As I write this article, we are in the middle of an all-out effort to work with Congress to avert a 5% across-the-board cut in physician reimbursement scheduled to take effect Jan. 1, 2007.

As you know, this cut is mandated by the sustainable growth rate formula used by the Centers for Medicare & Medicaid Services to determine physician payment levels.

Since we are in active discussions at this time, I obviously don't know what the outcome will be. Hopefully, by the time you read this, we will have an answer. The reason I write anyway is that, whatever the outcome, there are several lessons that are important for all physicians to understand, especially since we have been in this identical position repeatedly over the past several years.

First, a brief word about the SGR itself. The formula is simply a legislative device to prevent marked cost increases in the physician component of the Medicare program. Arguably, that is a reasonable goal. But the rigidity of the formula is such that it does not recognize legitimate causes of cost increases such as those due to increasing numbers of seniors who need increasing amounts of outpatient care.

Clearly, physicians should not face decreased reimbursements because of such realities. Other sectors of our health care delivery system have reimbursements based upon changes in the costs of delivering care. It is only reasonable and fair to expect that physicians be treated in a similar manner. And Medicare Part B premiums will rise 5.6% next year, while doctors' payments are scheduled to decline.

For the past several years, we physicians have faced cuts dictated by the SGR formula on a recurring basis. Year in and year out, we have spent enormous amounts of time, energy and resources on efforts to get rid of the SGR formula and to secure reasonable, cost-of-living type increases in physician payment.

The results have been significantly less than stellar. In fact, today CMS pays us at the same level it did in 2001. In my travels around the country, I spend a lot of time talking to physicians in every type of practice. It is my opinion that physician reimbursement across the board is insufficient. Furthermore, savings in the Medicare program have been largely at the expense of physicians. It is therefore even more egregious that year after year we are singled out for reimbursement cuts.

At this point in this recurring exercise of annual groveling before Congress to have physician reimbursement determined on a fair and equitable basis, I want to share some observations that I think are pertinent to every physician.

First, the Medicare system has structural flaws that demand aggressive attention and reform. It is naïve for anyone to assume that continued cuts in physician reimbursement will save the program. In fact, it is now quite clear that physician reimbursement in most cases is below the fixed costs of delivering services.

This fact has led to a rapidly growing access problem for seniors. Conscientious physicians find that they must severely limit the number of seniors they care for simply to protect the fiscal viability of their practices. When this point has been made to CMS, its response has been one of denial. The statement has been repeatedly made that its data show that, regardless of what we contend, not only are physicians continuing to see Medicare patients, but the number of visits also is increasing.

What is unsaid but very clearly understood is that there is an undeniable plan to continue cuts until there is substantial pressure from seniors who cannot access a physician. This, of course, places the physician in an untenable position.

We are all deeply committed and loyal to our patients and will accept personal hardship to continue that care. What we must understand is that such personal sacrifice on behalf of patients is not seen as such, but as proof that our entreaties are disingenuous. They say that, as long as physicians continue to see Medicare patients, it is clear that we are happy to accept decreased reimbursement because we know that we are overpaid.

This brings us to another reality in this debate. This year, we were told not only that we would have a 5% cut in January 2007, but that over the next nine years, we would have continued cuts totaling 40%.

Now, what do you think is the message that our government is sending to America's physicians? No one can survive a 40% reduction in income at a time when the fixed cost of providing services increases by at least 20%. If we take the hit and continue to provide services, we will see cuts year after year after year until it is absolutely impossible to continue. As every physician makes plans for his or her future, this fact must not be forgotten.

The next lesson is that, sooner or later, we must learn how we are being used. We are faced with the same dilemma of a large announced cut every year. Last year was the exact same thing. We carried a major effort and at the last minute, a 4.4% cut was changed to a freeze -- plus a promise to change the SGR if we agreed to several things.

We delivered on everything to which we agreed. Then, in January, we started an all-out campaign that has lasted this entire year. Now, at the last minute, we are exactly where we were a year ago.

We could avoid next year's cuts and even get a slight increase (below the level of the increased cost of doing business), but again we are asked for new concessions for this largesse. Furthermore, we are then told that a freeze next year will cause cuts of 10% to 11% the following year!

Again, I keep asking myself, "Is this simply an inability to manage this huge entitlement program, or is there, as any reasonable person must perceive, a concerted effort to force physicians to stop caring for their Medicare patients?"

If the latter is the case, what could possibly be the desired endpoint?

This is certainly not a very pleasant article to write or, for that matter, to read. But it is imperative that physicians have a clear understanding of the forces affecting our ability to practice our chosen profession so that we can make difficult decisions about our futures based upon knowledge and facts.

Outside micromanagement of every facet of medical practice has reached untenable levels. We are rapidly approaching a point in time that the future of health care delivery in America will be the subject of a great national debate.

Physicians must lead that debate. Our intimate knowledge of our patients' needs and the strengths and weaknesses of various delivery systems is critical. I am constantly impressed by how much the American public is depending upon physicians to provide such leadership.

As I have said repeatedly, the problems we face are really phenomenal opportunities that we must embrace. We must have a thorough understanding of each of our challenges and make certain that our responses are based upon real solutions and not emotional platitudes.

I am confident that we can develop a health care delivery system that will serve all of our citizens and provide physicians with the practices that they will find stimulating, challenging and extremely worthwhile. We must turn our energies to this problem of overriding importance and stop being paralyzed by Congress' inattention to our needs and to the needs of our patients.

William G. Plested III, MD is a thoracic and cardiovascular surgeon from Brentwood, Calif. He served as AMA board chair during 2003-04, and as AMA president during 2006-07.

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