Physicians may face a 10 percent cut in Medicare reimbursements in 2008, the Congressional Budget warns, thanks in part to Congress' December action to defer a scheduled 5 percent cut.
The culprit is a provision in the Tax Relief and Health Care Act of 2006 specifying that "payment rates will revert to the prior-law level in 2008," the CBO says. It's a result of the budget neutrality enacted by the sustainable growth formula the government uses for reimbursing Medicare Part B services.
The total cuts could reach 25 percent to 35 percent over the next several years, the CBO estimated in a Sept. 2006 budget brief.
American Medical Association Board Chair Cecil Wilson, MD, promised members in a Jan. 4 press release that "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 that Medicare has never paid for the true cost of delivering care.
Rohack 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."
He 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," said Rohack. "That way, the physician is not penalized for providing better care to patients."