Breathing room on Medicare payment

Fewer than three months remain before Medicare physician payment is set to fall off a cliff. On July 1, reimbursement is slated to drop 10.6%. But Sen. Debbie Stabenow (D, Mich.) has offered a safety net for doctors. Legislation she introduced last month would keep the current 0.5% increase in place for the remainder of this year and up payment by 1.8% in 2009.

The 18-month time frame would stabilize the payment situation, take the issue off the table during the most heated part of the election year and give lawmakers time to develop a long-term solution to the flawed system.

Congressional action is essential. Without intervention, the cuts would amount to a whopping 40% over the next decade. During that period, medical practice costs are expected to jump 20%.

These unworkable economics would force doctors to make difficult choices. Access to care for beneficiaries hangs in the balance. If cuts in the 10% realm go into effect this year, 60% of doctors have indicated that they would limit the number of new Medicare patients they see or stop accepting them altogether, and 40% would do the same for established Medicare patients, according to an American Medical Association survey of nearly 9,000 member and nonmember physicians. The figures rise to 77% and 68%, respectively, if reimbursement is cut 40% by 2016.

The practice of medicine would suffer as well. If pay is cut 10% this year, 72% of doctors have said they would defer the purchase of new medical equipment, 67% would put off investing in health information technology, 65% would stop providing certain services and 58% would discontinue nursing home visits, the AMA survey found.

The payment crisis and its troubling implications don't just have the physician community worried. The public is concerned, too.

A February AMA poll found that when told about the scheduled reductions, eight out of 10 Americans fear that seniors' access to care will be hurt. Three-quarters of Americans believe that Congress should stop the cuts.

The body that advises lawmakers on Medicare payment issues is urging lawmakers to act. The Medicare Payment Advisory Commission in its March report recommended replacing the cuts with increases that reflect the rise in the cost of practicing medicine.

This concept of matching pay raises with the change in practice costs should be the underpinning of the replacement for the disastrously flawed payment system. Today's methodology relies on the sustainable growth rate, which is defective in several ways.

The SGR is based on the gross domestic product, which doesn't reflect the annual rise in medical practice costs. It doesn't properly account for changes that benefit patients, such as laws and regulations that improve Medicare coverage, or technological advances in medicine.

The SGR doesn't recognize the program savings generated by the general shift from inpatient to outpatient care. Lastly, it wrongly includes Medicare expenditures on drugs administered in physicians' offices in its calculations.

Coming up with an SGR replacement will take time, and that's what the Stabenow bill offers. The legislation's 18-month increase will give lawmakers the time they need to develop a permanent solution, while giving doctors the payment stability they need to keep caring for Medicare patients.

Congress needs to break the current cycle of short-term patches. A long-term solution would free up lawmakers to concentrate on the bigger issue of securing the program's overall financial future.

The AMA is urging doctors and patients to contact their lawmakers to voice their support of the Stabenow bill (S 2785). Physicians can do so via the AMA Grassroots Action Center capwiz.com/ama/home/. Patients can join the effort at the AMA Patients' Action Network (link).

Beyond the payment update, the Save Medicare Act of 2008 would extend through 2009 a pair of provisions that improve pay for rural physicians. In addition, it would authorize the Physician Quality Reporting Initiative through 2010 and maintain the size of the payment bonus at 1.5%.

Indeed, July is fast approaching. But Stabenow's bill gives Congress the means to avert the Medicare payment crisis quickly before it hits.