Medicare pay struggle a familiar year-end cliffhanger

Organized medicine goes to Congress to prevent rates from being slashed by more than a quarter and to end the annual ritual of averting cuts.

By Charles Fiegl amednews staff — Posted Dec. 24, 2012

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Physician organizations are working toward a permanent plan to bring payment stability and higher quality to Medicare, but they have run into a familiar roadblock on Capitol Hill — impending deep payment cuts and no immediate relief in sight.

Doctors participating in Medicare again found themselves just days away from a large decrease in pay rates, with Congress working against the clock to craft another temporary solution. At this article’s deadline, no deal had been reached to stop a 26.5% cut under the sustainable growth rate formula even as lawmakers pledged to prevent the decrease before it hits on Jan. 1, 2013.

Congress has enacted stopgap legislation to prevent statutory reductions since the last cut took place in 2002. Some pay patches lasting a matter of weeks or a few months have been enacted — and applied retroactively — days or weeks after the cuts technically had taken effect. Virtually no one believes Congress will allow the SGR to lower pay in 2013, but doctors have sent a strong message to lawmakers that the annual ritual of enacting a last-minute, transitory solution needs to end.

Organized medicine groups spent much of Dec. 13 speaking with lawmakers on Capitol Hill about the SGR and about permanently repealing the formula. Leaders from the American Medical Association, the American Academy of Family Physicians, the American College of Physicians, the American College of Surgeons and the American Osteopathic Assn. visited with senators and representatives to stress the importance of replacing what doctors universally consider a severely broken payment system.

“Our message to Congress is clear — we are ready to work with you to move toward a stable Medicare program that promotes quality innovations for patients, provides a rewarding work environment for physicians and reduces costs for taxpayers,” said AMA President-elect Ardis Dee Hoven, MD. “The first step is stopping the cut of nearly 27% that will hit physicians who care for Medicare patients on Jan. 1, and then put in place a plan to repeal the SGR and end the ongoing threat of crippling cuts that undermine physicians’ ability to plan and innovate.”

Two-step solution proposed

Physicians presented a two-step plan to Congress, said AOA President Ray Stowers, DO. The organizations pledged to continue working with lawmakers on a permanent SGR solution in 2013 after first stopping the 26.5% cut before the start of the new year.

“All five of these organizations are pledging to come back to Congress to not only ask for the permanent repeal but come back with a solution in hand,” Dr. Stowers said. “A lot of resources from these organizations have gone into what the system of the future looks like — it eliminates the waste in the current system and reduces costs for taxpayers.”

The reaction from members of Congress was positive, as lawmakers welcomed ideas for improving and strengthening Medicare, Dr. Stowers said. Bipartisan support continues to exist for a short-term patch before the end of 2012. A larger package that eliminates the SGR is expected to be picked up during the next session of Congress in 2013.

The ACP stated in a Dec. 17 letter that doctors want to see Congress enact comprehensive Medicare payment and delivery reforms by Sept. 30, 2013. Under such a plan, the SGR formula would sunset no later than Dec. 31, 2013.

“Ultimately, it is our country’s families and seniors who will pay the price for congressional inaction,” said Glen Stream, MD, chair of the AAFP’s board of directors. “This annual, unrelenting threat is increasingly destabilizing the Medicare system for patients whose doctors — especially primary care doctors — work in small and medium-sized practices, often in underserved areas and with small or no operating margins. We need to end the uncertainty that undermines patients’ confidence in Medicare and disrupts physicians’ ability to provide ongoing care.”

The Alliance of Specialty Medicine sent a Dec. 14 letter to leaders in the House and Senate that also asked them to deal with the SGR by the end of the year. Doctors report they have considered limiting the Medicare patients accepted by their practices in response to the constant threat of drastic rate cuts and financial penalties related to quality initiatives. Failing to stabilize the program will have dire consequences, they said.

“Those who may remain in practice, or in Medicare, will not be able to make critical investments in their practice’s infrastructure to support new models of delivery that aim to improve quality and efficiency, including the adoption of health information technology,” the letter stated. “Consequently, beneficiary access to high-quality health care will be severely threatened, with longer waits and lengthy travel to see a physician, particularly specialists.”

Budget sequester also threatens Medicare

In addition to putting off a solution to the SGR problem, lawmakers left a number of major expiring tax and fiscal issues to settle during the final days of 2012. Included in the mix is an additional 2% reduction to Medicare rates for all health professionals required by the 2011 Budget Control Act.

The AMA and other organized medicine groups oppose the sequestration of Medicare and other federal health programs, which would be cut by 7.8% in 2013.

The White House Office of Management and Budget began preparing in early December for the execution of the required spending reductions, automatic cuts that were set up as the price for Congress and the White House failing to come to an agreement on a targeted deficit reduction package. However, the Obama administration remained committed to reaching an agreement that avoids those across-the-board reductions, said White House press secretary Jay Carney.

“OMB is simply ensuring that the administration is prepared, should it become necessary to issue such an order,” he told reporters during a Dec. 5 briefing.

The lame-duck Congress also is prepared to work through the remaining days of the calendar year to reach an agreement. A revised House calendar had lawmakers in the Capitol until Dec. 22. On Dec. 17, Senate Majority Leader Harry Reid (D, Nev.) said his colleagues should expect to be back in Washington the day after Christmas.

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A history of going to the brink — or beyond — on Medicare pay

Reductions to Medicare rates have been delayed, in some instances retroactively, since 2002. The actual update amounts reflect rate changes from the previous adjustment to Medicare payments.

Year Scheduled update Actual update (average) Enactment date
2002 -4.8% -4.8% N/A
2003 -4.4% 1.4% Feb. 20, 2003*
2004 -4.5% 1.5% Dec. 8, 2003
2005 -3.3% 1.5% N/A
2006 -4.4% 0.2% Feb. 8, 2006*
2007 -5% 0% Dec. 20, 2006
2008 (Jan.-June) -10.1% 0.5% Dec. 29, 2007
2008 (July-Dec.) -10.6% 0.0% July 15, 2008*
2009 N/A 1.1% N/A
2010 (Jan.-Feb.) -21.3% 0.0% Dec. 19, 2009
2010 (March) -21.3% 0.0% March 2, 2010*
2010 (April-May) -21.3% 0.0% April 15, 2010*
2010 (June-Nov.) -21.3% 2.2% June 25, 2010*
2010 (Dec.) -21.3% 0.0% Nov. 30, 2010
2011 -25% 0.0% Dec. 15, 2010
2012 (Jan.-Feb.) -27.4% 0% Dec. 23, 2011
2012 (March-Dec.) -27.4% 0% Feb. 22, 2012
2013 -26.5% TBD TBD

*Missed deadline

N/A, not applicable; TBD, to be determined

Source: “Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System,” Congressional Research Service, Aug. 6, 2010 (link)

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