Medicare pay: SGR fatigue

Physicians say they are beyond exasperation as Congress struggles to repeatedly patch Medicare rates, lately just for a month or two at a time.

By Chris Silva — Posted May 3, 2010

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Juliette Madrigal-Dersch, MD, walked away from Medicare four years ago and has rarely looked back. Frustrated with the program's condition, the internist in Marble Falls, Texas, decided to see Medicare patients only on a private-contracting basis.

That means neither she nor her patients can claim any payment from Medicare. It also means she can charge what her services actually cost, not just what the government says it will pay. She also can choose not to charge anything, as is her policy for patients age 90 and older.

The decision to cut ties with Medicare -- and some of her older patients in the process -- was difficult at first. But now, Dr. Madrigal-Dersch says she could not imagine still being associated with a program whose pay system has crumbled to such a degree that Congress has resorted to patching scheduled cuts of more than 20% for as little as a month at a time.

"The reason I opted out is because the reimbursement rates were low, the amount of paperwork was exceptionally high, and the fees -- even if you made an innocent error -- could be up to $10,000 per incident," she said. "Why would you sign up for something that would guarantee to pay you less over time when you're expected to work harder? We want to be able to spend our time caring for patients instead of assigning codes to them and filling out paperwork."

Dr. Madrigal-Dersch's particular story is uncommon. Relatively few doctors sever ties with Medicare altogether. But the wearying cycle for physicians of being brought to the brink of a massive cut before lawmakers apply yet another short-term patch is taking its toll.

"I don't think people realize how stressful that is for a doctor," she said. "It will make you paranoid and distrustful, and makes it hard to sleep."

Many physicians who aren't thinking of dropping out of the system completely are at least mulling a change to their Medicare participation status. Some have stopped accepting new Medicare patients, and are only seeing current enrollees based on an obligation to patients with whom they have developed strong relationships.

Already, 2010 has been a particularly bad year for Medicare pay in the eyes of physicians. In the past, lawmakers generally have boosted or frozen Medicare rates in lieu of cuts for a year or two at a time, but the temporary solutions have become even more short term. The most recent freezes bought doctors only a month or two before lawmakers needed to act again -- and that was after allowing an unprecedented 21% cut officially to take effect twice before reversing it. The latest patch gets doctors through the end of May before the cut comes back.

The American Medical Association said physicians have lost patience with the situation. Starting last year, the AMA said it no longer would support temporary measures to forestall doctor pay cuts under the sustainable growth rate system, insisting that Congress enact a permanent SGR repeal that would align rates more closely with physician costs.

Limited ways out

Robert Mingea, MD, is a cardiologist in Austin who subleases office space in the same building as Dr. Madrigal-Dersch. He would like to opt out of Medicare, but he can't. About 70% of his patients are Medicare beneficiaries, so dropping out would mean the end of his practice as he knows it.

That leaves Dr. Mingea with few options that are not drastic. Saying he would like to "opt out of America," he is contemplating moving to and practicing in another country, or retiring early. The latest unpredictability of the Medicare pay formula has damaged his faith in the system.

"My patients are great, and I know they appreciate me, but this is a slap in the face from the government," he said, referring to Congress' failure to heed the pleas of organized medicine to enact a long-term solution to the problem.

Douglas A. Woodburn, MD, a general surgeon in Ventura, Calif., also can't see himself opting out of the program completely. Nearly half of his patients are in Medicare, and once physicians choose private contracting status, they cannot submit any claims to Medicare for two years. But he still has options.

"I think I would just have to cut way back on the number of Medicare patients I can take care of," Dr. Woodburn said. "I think a lot of physicians would at least initially take a similar path, which would unquestionably impact Medicare patients' access to care."

John Poole, MD, a general surgeon in Teaneck, N.J., also said he would love to opt out of Medicare -- if only to send a message to the government -- but that he is more likely to change his status to nonparticipating. That way, he still could see Medicare patients, but it would be on a case-by-case basis, with the potential for slightly higher rates for his care.

David Baron, MD, a family physician in Malibu, Calif., accepts only self-pay patients who are willing to pay a concierge fee. The only type of insurance his practice does collect, on a case-by-case basis, is Medicare, which he said covers about 35% of his patient population. (See correction)

Despite being fairly comfortable with his non-participation status, Dr. Baron said he would consider going a step further and not taking any new Medicare patients, if only to make Congress realize the constant stress of the SGR situation has grown out of hand.

When limited options won't work, physicians may be finding that more dramatic steps look attractive. Dr. Mingea noted a trend in the Austin area of doctors leaving private practice and becoming employees of hospitals, where decisions about payment and salaries are left to others. Dr. Woodburn said he fears many doctors may just retire early if Medicare pay doesn't become more stable.

Where's the breaking point?

Despite increasing numbers of doctors saying they are tired of Medicare's worsening chronic payment problems, most physicians do not yet appear to be walking away from the program.

In its annual March report to Congress, the Medicare Payment Advisory Commission recommended only a 1% pay update for physicians in 2011, in part because it found beneficiary access to physician services remains good. The access is better than that reported by privately insured patients ages 50 to 64, MedPAC noted.

But the AMA and others have reported pockets of access problems in some parts of the country. And physicians note that pay has remained relatively stagnant over the past decade, while the costs of providing care have gone up steadily. If the increasingly jarring roller-coaster ride with the SGR continues and a long-term solution is not adopted, the system will reach a breaking point, they say.

"Fatigue is a good word. It's getting ridiculous," Dr. Poole said. "I don't mean to sound like a martyr, but in many respects, the system only functions due to the benevolence of physicians."

Cary Kaufman, MD, medical director of the Bellingham Breast Center in Bellingham, Wash., already can charge more to care for his Medicare patients because of his nonparticipating status. But after accounting for rent, salaries and medical liability insurance, he's still barely breaking even when it comes to Medicare. The general surgeon cannot make up for any shortfall by increasing his patient volume, because that would mean cutting down on time spent with patients -- something he won't consider.

"Due to the complexity of breast cancer, it is necessary to take an extraordinary amount of time explaining choices associated with this disease," Dr. Kaufman said. That leaves opting out of Medicare altogether as his only real option if the system is not fixed.

Dr. Madrigal-Dersch, the internist who left Medicare four years ago, said she feels more empowered as a physician since she switched to private contracting. She is able to work on her own timetable and give each patient the commitment needed to provide the best care.

After she switched to private contracting, she lost about 10 of her roughly 100 Medicare patients. But since then, her number of Medicare-eligible patients has quadrupled, and her practice works very well, free from the payment woes of the federal program.

"I think the reason this works is because people can see where their money goes," she said. "I see billionaires and I see migrant workers, and everyone gets the same treatment."

Back to top


Shorter patches for bigger cuts

View in PDF

Click to see data in PDF.

Since 2002, Congress has stepped in nine times to prevent or reverse increasingly larger Medicare physician payment cuts mandated by the sustainable growth rate formula, usually for a year or more at a time. But recent patches have become even more short term:

Source: American Medical Association

Back to top

Participation options

Participation: PAR physicians agree to take assignment on all Medicare claims, which means they must accept Medicare's approved amount -- 80% paid by the government plus a 20% patient co-payment -- as payment in full for all covered services for the duration of the calendar year.

Nonparticipation: Non-PAR physicians can file nonassigned claims for Medicare patients on a case-by case basis in return for fees that are set at 95% of Medicare-approved amounts. But non-PAR physicians can balance-bill patients for up to an additional 15% of the reduced rate, meaning the physicians can effectively charge 9.25% more. Because Medicare in those cases pays the patients, whom the physicians must then bill for the services, doctors considering becoming non-PAR for an upcoming calendar year are advised to consider potential collection costs and bad debts when projecting revenue.

Private contracting: Physicians and Medicare enrollees who choose to enter into private contracts for care agree not to bill Medicare for any of those services. Doctors cannot make private contracting decisions on a case-by-case basis. Once physicians have opted out of Medicare completely, they cannot submit claims to Medicare for any of their patients for a two-year period.

Source: "Medicare Participation Options for Physicians," American Medical Association, Feb. 19 (link)

Back to top

New board poses more Medicare pay uncertainty

Even as they fight to convince Congress to repeal Medicare's sustainable growth rate formula, physicians are gearing up for a battle over a new federal panel that could lead to pay cuts on top of the ones that already are scheduled.

The health system reform package enacted in March authorizes a Medicare Independent Payment Advisory Board, a 15-member board of health care experts appointed by the president and approved by the Senate that will submit proposals to Congress to extend Medicare solvency and improve quality. Its recommendations -- including any proposed pay cuts -- would start taking effect as early as 2015 unless overridden by two-thirds majorities in both houses of Congress. The Congressional Budget Office estimated that IPAB would save the government $13 billion over 10 years.

But the AMA and other physician organizations expressed concern about empowering such a board without enacting more oversight to ensure that physicians are not negatively impacted.

In a Jan. 13 letter to Senate Majority Leader Harry Reid (D, Nev.), AMA President J. James Rohack, MD, noted that physicians already are subject to payment cuts under the SGR. In addition, hospitals initially are exempt from IPAB review.

"It makes no sense to subject physicians to two separate expenditure targets while at the same time exempting large segments of Medicare providers who are subject to no target at all," Dr. Rohack said. "Physicians should not be subject to double jeopardy through two different expenditure targets and potentially additional multiple payment reductions in the same year."

The American College of Physicians said it supports the concept of an independent board. But the current structure of the panel does not ensure adequate representation of primary care, nor does it ensure that any cost reductions would not adversely affect health care quality, ACP said. The association is seeking changes to the board through future legislation.

The American Academy of Family Physicians also said the board's current structure is flawed, and that it should be looking at hospital and hospice costs in addition to physician pay.

Back to top


This article originally misidentified the specialty of David Baron, MD. American Medical News regrets the error.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn