Medicare pay overhaul can no longer wait

Physicians are all too familiar with what has become a nearly annual ritual of government brinksmanship on Medicare pay. What is unprecedented this time is the size of the projected pay cut -- 21% -- and the extent of the damage that such a disastrous reduction would wreak.

Congress has a little less than a year to stop that double-digit cut in pay or risk having many physicians simply become unable to take care of the seniors and disabled who need them the most. In terms of the bigger picture, the scope of this year's Medicare pay situation makes it the loudest warning call ever to lawmakers that they must start crafting a more lasting solution to this death dance.

In every year since 2002, Congress has replaced threatened reductions with freezes or small increases. But while these modest actions have helped physicians keep their heads slightly above water, that situation cannot hold without a more robust response. Physicians are just now starting to be paid more for Medicare services than they were in 2001.

And these pay interventions have become increasingly difficult to secure. Last July, Congress was able to enact an 18-month pay patch that included a modest 1.1% boost in 2009 rates only after overriding a presidential veto -- and only after a potentially devastating 10.6% cut had been in effect officially for a full two weeks.

All in all, it's no way to keep afloat the small practices -- in essence, they are small businesses -- that form the backbone of Medicare access.

A major part of the problem: While rates have not gone down since 2002, Congress has not reset the baseline for the flawed Medicare payment formula that dictates how large these reductions must be. That means every time one of these temporary patches expires, the system acts as if none of them had ever occurred, making the situation much worse than it was the year before. So the 15% cut that would have taken effect in 2009 gives way to a 21% cut in 2010.

Lawmakers must start by re-basing the sustainable growth rate formula to account for the interventions they have made since 2002 and to project future spending more accurately. It is not a giveaway to physicians; it is simply accepting the reality of the promises lawmakers made to physicians in each of those years.

Re-basing the SGR formula also gives Congress more time to craft a reasoned response to the long-term payment problem. Physicians realize that a permanent solution that better aligns Medicare pay with practice costs cannot be put in place overnight. But that long-awaited fix cannot happen while doctors and their patients continue to live in constant fear of the next massive cut.

The Obama administration can begin easing this fear and start paying physicians more fairly. So far, Medicare officials have refused to remove the costs of physician-administered drugs from the calculation of the payment formula, even though these unrelated costs artificially skew the results and make the cuts to physicians much larger than they should be. Medicare has the authority to take Part B drugs out of the equation retroactively at any time, and President Obama can start his term out right by ordering that to happen.

Physicians aren't looking for a blank check. They realize they will need to do their part to be good stewards of our nation's health care dollars if they expect Congress to fulfill its own commitment to patients.

"Let's think about what we need to do ourselves," AMA President Nancy H. Nielsen, MD, PhD, told delegates at the Interim Meeting in November 2008. "We have to acknowledge that orders we write drive up health care costs."

That's why the AMA and others are taking steps to promote comparative effectiveness research, develop measures of appropriate care, improve care coordination through medical homes and find other ways to determine what care is worth paying for and what might not be the best option.

The nation's physicians are ready to take on their share of the responsibility. Now it's time for Congress and the new White House to do the same.