AMA: Permanent repeal of the Medicare physician payment formula must be part of health reform

The following is part of a series of original guest columns by the American Medical Association.

by J. James Rohack, M.D.

All eyes are on the Senate Finance Committee this week as they prepare to vote to move health reform legislation forward. The AMA is committed to health reform, and as the process moves to the Senate floor, it’s crucial that the Senate include permanent repeal of the current Medicare physician payment formula in its health reform legislation.

AMA: Permanent repeal of the Medicare physician payment formula must be part of health reform Democrats and Republicans have publicly stated that the flawed formula should be scrapped. Chairman Baucus and others have expressed support for a long-term solution. It’s clear to physicians and patients that the time for band-aid fixes is over. Short-term fixes have temporarily averted an access crisis, but it has also led to next year’s projection of a 21 percent cut, with more in years to come.

The result of the cuts is clear: reduced access and choice of physicians for seniors who rely on the program now and for the millions of baby boomers aging into the program in just two years as physicians are forced to make practice changes. No doubt the cuts will hurt efforts by physician practices to purchase health IT, participate in quality improvement activities, update equipment or hire new staff.

As we work on health reform this year, preserving the security and stability of Medicare must be part of the equation. In addition to permanent repeal of the “Sustainable Growth Rate” Medicare physician payment formula, AMA is working to improve other physician-related provisions in the Finance committee mark.

Specifically, we are concerned with the creation of a Medicare commission that does not apply equally to all stakeholders. The proposal would create a double-jeopardy situation for physicians and non-physician practitioners who are already subject to a spending target and potential payment reductions under the Medicare physician payment system. If it is retained, the concept of an Independent Medicare Commission must be substantially redesigned to ensure fairness and equity, and to avoid unintended consequences for Medicare patients.

Also of concern is a provision that penalizes all physicians above the 90th percentile in resource use. This ensures that a significant number of physicians will always be subject to steep payment reductions, regardless of any changes they have made in their practice patterns or how close they are to the average. AMA is calling for the elimination of this provision from the Senate Finance bill.

As I travel the country, I hear from physicians daily about the need for reform. AMA is constructively engaged with Congress and the administration to ensure that reform improves the system for patients and physicians – and that includes permanent repeal of the Medicare physician payment formula.

J. James Rohack is President of the American Medical Association.

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  • BookstoreMD

    Healthcare reform has to be in all dimensions for it to be successful:
    1) Tort Reform
    2) Insurance companies regulation and reform
    3) Universal healthcare
    4) Reimbursement and insurance billing reform
    5) Quality initiatives
    6) Streamlining all new technologies to be able to talk to each other

  • AmericanMedicalAssociation

    Agreed – comprehensive reform is key, and AMA is working to achieve seven critical elements as part of health reform:
    - health insurance coverage for all Americans
    - insurance market reforms that expand choice of affordable coverage and eliminate denials for pre-existing conditions;
    - assurance that medical decisions will remain in the hands of patients and physicians, not insurance companies or government officials;
    - investments and incentives for quality improvement,
    - prevention and wellness initiatives;
    - repeal of the broken Medicare physician payment formula that would trigger steep cuts and threatens seniors’ access to care;
    - implementation of medical liability reforms to reduce the cost of defensive medicine; and streamlining and standardizing of insurance claims processing requirements to eliminate unnecessary costs and administrative burdens.

  • Tom Necela

    Well stated article. Instead of penalizing physicians for utilization and creating spending caps, why doesn’t Medicare look in the mirror first and slash the fat off its own spending. Medicare consistently overpays for many of its DME suppliers. It certainly has a big enough bargaining power to at least pay competitive prices, which can be profitable for all parties, instead of spending money in magnitudes that can only be rivaled by governmental agencies that are often targeted for their own lavish spending.

  • Doc99

    Just so we all can be clear, what is the AMA’s fallback position should the final bill signed into law fall far short of your stated goals? I see, for example, that the Senate Finance Committee puts forth a proposal whose Healthcare provisions don’t commence until 2013 yet the Tax provisions begin in 2010. And Baucus’ tax on medical devices include some curious items such as:

    * Dentures, both partial and full (Class VI)
    * Fetal cell-screening kit (Class IV)
    * Female condoms, single use (Class III)
    * Treponemal syphilis test (Class IV)
    * HIV saliva test kit (Class IV)
    * Patient data storage and transmission software (Class VI)
    * Stair-climbing wheelchair (Class III)
    * Inflatable penis prosthetic (Class III)
    * Hip, knee, ankle, breast prosthetics (Class III)
    * Soft contact lenses, extended wear (Class III)
    * IUDs (Class III)
    * Dialysis catheters (Class III)
    * Dental X-rays (Class II)
    * Sickle-cell anemia tests (Class II)
    * Mammograms (Class II)

    I could go on but I welcome your comments.

  • AnonMD

    The 21% cut needs to proceed as scheduled. At that point, enough physicians will quit taking care of Medicare patients, so politicians and the public will start paying attention.

  • Evinx

    The 21% cut is necessary so that the CBO score of the bill will be deficit neutral. This gives cover to the the senators to vote for the bill. After passed and enacted, they will subsequently vote to rescind the 21% cut. This is the current state of goverenance in America. It is all about crafting legislation to accomodate and get support from sufficient special interest groups so that journalists can write about how much the pols are doing for the people which in turn helps them garner votes to stay in power.

    This is the reality.

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