Congress’ last-minute deferral of a 5 percent cut to Medicare reimbursements last year means physicians may face up to a 10 percent cut in 2008, the Congressional Budget Office has warned.
According to the CBO, a provision in the Tax Relief and Health Care Act of 2006 specifies “payment rates will revert to the prior-law level in 2008.” This is a result of the budget neutrality of the sustainable growth rate (SGR) formula – the methodology for reimbursing Medicare Part B services.
The total cuts could reach 25 percent to 35 percent over the next several years, the CBO said in a September 2006 budget brief.
American Medical Association Board Chairman Cecil Wilson, MD, said in a Jan. 4 press release, “This year we will work with Congress, the Administration and seniors to stop the 2008 Medicare cut and enact a more permanent solution to the flawed Medicare physician payment formula.”
Physicians have expressed concerns that such cuts will reduce quality care and may force some hospitals and clinics to close their doors to Medicare patients.
James Rohack, MD, director of the center for policy at Scott & White, a Texas-based health system, said Medicare has never paid for the true cost of delivering care. He said he expects opinions voiced in 2002 – the year when the SGR was enacted¬ – to resurface this year.
“I think this will refocus the same arguments … that the Medicare patient is getting quality medical care, good quality services and living longer, and all of that results in more services being delivered,” he said. “With this formula, every time that volume goes up, the cuts have to recur.”
Rohack pointed out that the scheduled 1.5 percent reimbursement incentive for reporting quality measures in the second half of 2007 is based on delivery of service, and will thus be offset by cuts as well.
One alternative to the flawed formula is to adopt a payment system based on the Medicare Economic Index, Rohack said. “If Congress moves towards the MEI, payments for services would reflect the true cost of delivering care,” he said. “That way, the physician is not penalized for providing better care to patients.”