WASHINGTON – After Congress deferred a 5 percent cut to physicians’ reimbursements for Medicare services late last year, the Congressional Budget Office warned that the deferral could result in a cut as large as 10 percent going into 2008.
On July 2, the Centers for Medicare & Medicaid Services delivered on the warning, proposing a 9.9 percent cut to physicians’ reimbursements for Medicare-covered services.
The budget neutrality of the sustainable growth rate formula is to blame for CMS’ proposal. The formula, used for determining pay for services under Medicare Part B, is designed to snowball the cuts that aren’t made in prior years. And as patient volume increases, so does the size of the cut.
Democrat and Republican members of Congress met July 10 in Washington with the American Academy of Family Physicians, the American College of Physicians and the American Orthopedic Association to discuss the proposed cut.
“The central issue was, this is just unrealistic,” said Rick Kellerman, MD, president of the AAFP. “We’re tired of coming to Washington, D.C. every year. The legislators told us that they are frankly tired of it, too,” he said. “A 10 percent cut is impossible to deal with.”
Kellerman said the cut would significantly affect the healthcare system.
“We’re trying to encourage physicians to invest in new technologies. This just sends the wrong message,” he said.
Additionally, the lowered reimbursements could affect medical students’ practice decisions. “We have rural areas with high populations over age 65, and if you’re looking at moving to an area where you’re going to be practicing medicine, this is going to affect your choices,” he said.
Last year, Congress set aside $1.35 billion that, advocates say, could be used to reduce or avoid the scheduled 2008 cut. CMS has decided to use the funds for its Physician Quality Reporting Initiative, as part of the agency’s effort to become an active purchaser of quality care. CMS has declined to comment on the cut proposal until a final rule has been issued.
Popular options for funding physician pay increases have included a tobacco tax hike, which is now unofficially earmarked for the renewal of the State Children’s Health Insurance Program, and a diversion of the subsidies currently paid to private insurers with managed Medicare Advantage plans.
Cecil B. Wilson, MD, American Medical Association board member, faulted CMS for using the funds for PQRI instead of averting the cut.
“CMS has chosen to spend all of the money to provide just 1.5 percent to 2 percent to physicians who report on certain quality measures,” Wilson said.
Peter McGough, MD, chief medical officer at the University of Washington Medicine Neighborhood Clinic in Seattle, said he believes PQRI will eventually transition from a voluntary reporting program to a necessity. “It’s going to be a functionality that we’ll need to do in order to continue to see Medicare patients,” said McGough.
While his practice has seen revenue increases under Medicare’s new physician fee schedule rewarding evaluation and management services, McGough said PQRI would be a financial wash for his group. “We will likely in the next year be involved in it, but the amount of work involved isn’t covered by the reimbursements,” he said.
Kellerman said the meeting with Congress resulted in an agreement to, in the short term, “Get a positive and predictable update in the next few years, and then get (Congress) to figure out what they want to do in the longer term two to three years down the road.”