Brief Medicare pay fix may mean showdown in lame-duck Congress

Lawmakers will wait until after the elections to tackle the Dec. 1 Medicare pay cut, observers predict.

By Chris Silva — Posted July 19, 2010

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For Leah McCormack, MD, the modest Medicare raise she started receiving in late June to replace a double-digit cut might be the last adjustment the government makes to her pay. After the first half of a particularly tumultuous year for Medicare physicians, she has decided to drop out of the program.

Dr. McCormack, who has operated a solo, private dermatology practice for 25 years in Forest Hills, N.Y., decided in July to terminate all of her contracts with Medicare and managed care companies as soon as she is able.

"The failure of the government to permanently fix the long-promised physician reimbursement rate factored greatly into this decision," she said.

Dr. McCormack, who also is president of the Medical Society of the State of New York, said she would continue trying to provide the best care she can to all of her patients. But the enactment on June 25 of yet another short-term payment patch -- the fourth in the past six months -- is the final straw for some physicians like her who say they are struggling to maintain a viable business under the Medicare sustainable growth rate formula.

The latest action gives physicians a 2.2% raise and undoes a 21% cut that went into effect June 1. But that's only through Nov. 30, after which the reduction comes back -- this time at an estimated 23%.

"It is not a permanent fix for the SGR problem," Dr. McCormack said of the most recent pay patch. "It does not change the fact that doctors are subject to price-fixing by the government. The 2.2% increase is grossly inadequate, especially since the current fees are outdated by at least 10 years, and costs have increased dramatically during the same period."

On top of the fact that more lasting payment reform has been particularly elusive this year, the next deadline for Congress to prevent another cut occurs during the upcoming lame-duck session of Congress.

"Forgive me for being a cynic, but the six-month patch seems to conveniently mask the issue until after the November elections," Dr. McCormack said. "And then what? How are we physicians expected to plan for the future and keep our offices viable when we never know what Congress will decide to pay us?"

Going down to the wire again

Health policy experts agreed that the next Medicare physician pay battle is not likely to be resolved before the November elections.

"It's been our experience almost every time that Congress waits until the last minute. And while that's not preferred, I would not be surprised if that were to happen again this year," said Rich Trachtman, director of legislative affairs at the American College of Physicians.

Still, while frustration has mounted with Congress' handling of the SGR issue this year -- at times on a month-to-month basis -- Trachtman said that if Democrats maintain control of both chambers, they finally might be inclined to enact a permanent fix and remove the item from their agenda.

Short of a permanent solution, Trachtman said the ACP still favors a plan floated earlier this year that would have replaced Medicare physician pay cuts with raises for the next 3½ years and boosted primary care rates even higher. Then lawmakers and policy leaders could focus on moving toward a new permanent system that establishes higher targets and updates for primary care and preventive services, he said.

The American Academy of Family Physicians teamed up with the ACP in support of the 3½ year plan, along with AARP, the American Osteopathic Assn. and the Military Officers Assn. of America.

AAFP President Lori Heim, MD, said her organization's members are furious that lawmakers have not agreed on a long-term solution.

"The whole problem with the SGR fix is no one wants to be seen adding to the deficit, although everyone agrees the process is ludicrous," Dr. Heim said. "So I see no reason why the next SGR deadline won't go down to the wire again."

She said "hands are flying up" at meetings with physician members when she asks whether they plan to stop taking new Medicare patients.

Dr. Heim predicts that Congress will wait until after the election and just before the Thanksgiving holiday to address the Nov. 30 deadline. How that plays out will depend considerably on which members are in lame-duck status by then, she said.

Some policy experts said the majority of lawmakers will be focusing on issues pertaining to job growth and the national debt in advance of the November elections.

"To put this issue on the table while debt is such an important issue in people's minds -- that could be a nonstarter for many lawmakers," said Michael Franc, vice president of government relations at the Heritage Foundation, a conservative think tank based in Washington, D.C.

Franc said the American Medical Association, ACP, AAFP and other physician organizations may be best served by together drafting a plan to do away with the SGR formula that includes budgetary offsets. It might be time to get "around the table and get something ironed out, because it's a different world right now."

Mopping up the Medicare "mess"

AMA President Cecil B. Wilson, MD, said the latest congressional action on Medicare physician pay does not tackle the long-term problem lawmakers got themselves into in the first place. The estimated 23% cut scheduled to begin Dec. 1 will rise to nearly 30% on Jan. 1, 2011.

"The six-month Medicare patch ... is a very temporary reprieve for seniors and baby boomers who rely on the promise of Medicare," Dr. Wilson said. "Delaying the problem is not a solution. It doesn't solve the Medicare mess Congress has created with a long series of short-term Medicare patches over the last decade -- including four to avert the 2010 cut alone."

An AMA survey released in 2010 concluded that about 17% of physicians are restricting the number of Medicare patients in their practices.

The impact of the constant threat of cuts is being felt in North Carolina. Cigna Government Services, the Medicare contractor for the state, estimates that approximately 120 physicians have opted out of Medicare since the beginning of the year, according to the North Carolina Medical Society.

Conrad L. Flick, MD, a family physician in Raleigh, N.C., knows what those doctors are going through. He decided four years ago that he no longer would accept any new Medicare patients.

"My No. 1 job is take care of my patients and my staff," he said. "I can't think of any business where you can't make up for costs if overhead goes up."

Dr. Flick is "cautiously optimistic" that a permanent solution will be agreed upon in the not-too-distant future. But, he added, "it's going to take some people who look at what's right for their constituents and not worry so much about getting elected."

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