Looking beyond the Medicare pay patch

Amid all the other evidence that Medicare's physician payment formula is fundamentally flawed is that it requires an annual, cliff-hanger adjustment in Congress to stave off a crisis.

The last-minute pay patch approved late last month is notable in that it doesn't cover even a full year. Physicians will see a half-percent pay increase for six months. But if there is no agreement by June 30 -- and one proved elusive through 2007, save for this stopgap -- even that small raise disappears. At that point, the 10.1% cut that was slated to greet the start of 2008 would go into effect.

If this drastic cut goes through -- actually just the first big jolt of a projected 40% in cumulative reductions in coming years -- there is little doubt that it would hurt seniors' access to care.

In previous years, threatened cuts were smaller (though still outrageous), and pay was raised a bit more than this time -- or not at all. Overall, when balanced against even the government's medical inflation figure, doctors have fallen behind -- and will lose ground drastically if anticipated cuts are made.

Yet physicians soldiered on. This go-round, though, it's likely that a number of doctors gave serious thought, perhaps for the first time, to canceling the otherwise automatic renewal of their Medicare participation agreements. (The payment patch gives doctors a second chance -- the deadline for changing participation status has been extended to Feb. 15.)

At the heart of all this is the sustainable growth rate formula, which was written to control spending. Like any arbitrary cap, it fails to factor in the realities of quality patient care. That includes the many valid increases in service volume tied to preventive medicine and better management of chronic illness, as well as spending tied to innovation and even many of the government's own coverage mandates.

The AMA has been in the lead, clearly and consistently, in calling for an end to this faulty payment formula and in putting forth solutions that result in appropriate care. The AMA reports spending $3 million campaigning via television, newspapers, radio and the Web to stop the 10.1% cut. Included in that effort has been the grassroots activism -- so far, a half-million patient and physician contacts with lawmakers -- that will remain vital in the coming months.

The AMA, with a vast community of fellow medical organizations, has proposed a system that bases physician payment updates on changes in practice costs. What's at issue here are not only increases in traditional practice expenses, but also the commitments that physicians take on to improve and modernize their practices through health information technology.

Meanwhile, the Medicare Advantage program -- notorious for questionable marketing practices toward patients and shabby treatment of physicians -- can count on a bonus at the very moment that physicians face cuts. The government's priorities here are seriously out of whack. Medicare Advantage serves a narrow slice of the senior population -- about one-fifth -- while it is physicians who care for the majority of Medicare patients under traditional Part B. In that light, the bonus paid to Medicare Advantage plans is being misdirected.

At least the present stopgap measure gives physicians some time to argue their case. One high point will be the AMA National Advocacy Conference, on April 1 and 2, which falls roughly in the middle of the time that physicians have to work in to get payment relief. This annual Washington, D.C., event will give physicians the chance to go right to Capitol Hill to make their voices heard.

Then and throughout the next six months both the high stakes and this limited window of opportunity require that medicine speaks with a focused and united voice. Organizations representing patients also have an important role to play -- it's access to care for their members that's at risk. Ultimately, lawmakers must understand that they have to step up to the plate and enact fair and realistic long-term reform.