AMA: Why patients should care about fixing the Medicare physician payment cut

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

by J. James Rohack, MD

AMA: Why patients should care about fixing the Medicare physician payment cut Prominently displayed at the top of the AMA’s Web site this week is a “countdown clock” to this year’s 21 percent Medicare physician payment cut, which will hurt physicians ability to care for all Medicare and TRICARE patients. As of this posting, there are about two weeks left for congressional action.

On behalf of the many dedicated physicians who care for seniors, the disabled and military families, the AMA is strongly urging Congress to permanently fix the flawed payment formula that projects this cut. AARP and the Military Officers Association of America (MOAA) have joined us in this call for permanent reform.

This is a crisis that affects all physicians who care for Medicare patients as the cut is across-the-board to all states and specialties. I’m concerned about the impact on seniors who need the care that physicians are able to provide as they age – and also about the health of our practices. A cut of this magnitude will impact our ability to participate in quality improvement activities and to invest in health IT. The instability created by the Medicare physician payment formula, and Congress’ series of short-term fixes, creates great difficulties for physician practices caring for Medicare patients. Permanent repeal of the broken formula and providing payments that better reflect the cost of providing care is the only way to preserve the security and stability of Medicare’s physician foundation for seniors who rely on the program.

Here’s where we stand, about two weeks out from the 21 percent cut. In November of 2009, the U.S. House of Representatives passed H.R. 3961, which repeals the current formula and updates payments to better reflect increasing practice costs. The AMA and its partners in organized medicine, along with AARP and MOAA, are strongly urging the U.S. Senate to act quickly with a similar bill. Legislation that fixes the formula once and for all can go forward independent of a health system reform bill.

The Senate took a step forward earlier this month by exempting $82 billion of the Medicare physician payment reform cost from its “pay as you go” rules, known as a pay-go waiver. That legislation also passed the House, and now both the House and Senate must still pass identical bills to repeal the formula.

Time is running out, and it’s critical that your legislators, especially your Senators, hear directly from you about the important need to fix the formula to preserve our ability to care for Medicare and TRICARE patients now and for years to come.

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

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  • WhiteCoat

    Sorry, but I respectfully disagree that we need to avert the cuts.
    For years the medical house has been focusing its efforts on “stopping the Medicare cuts” and what has it gotten us? A bunch of brinksmanship. Eventually the cuts are averted at the last minute, everyone wipes the perspiration from their collective brows, and we get a token increase in reimbursement of a percentage point or two … and we’re supposed to be thankful for it.
    Stop fighting the cuts. Let Medicare cut payments. Let physicians stop seeing Medicare patients because of the cuts. You think there’s a crisis now? Cut payments for medical services by 21%. Then you’ll see a crisis.
    But you know what? A crisis is just what we need. Necessity is the mother of invention. Our medical system is broken and Medicare/Medicaid as we know it is unsustainable. Bureaucracy has spiraled out of control and has driven more doctors from practicing medicine than you can shake a stick at. Maybe that’s what they want. Less doctors means less payments. Still won’t change the fact that our system must change.
    Want to get both Democrats and Republicans to the table and talking about health care reform again? Have about 100,000 angry voters call their offices when they can’t find a doctor to take care of them any more due to the payment cuts. Congress doesn’t have the gonads to let that happen – especially after how well this country’s health care reform has gone.
    Why doesn’t the AMA stand up to these schmoes instead of playing patty cake with them?
    Won’t happen, I know, but it’s fun to dream about.
    I have a premonition that I’ll be referencing this comment during the next narrowly averted set of Medicare cuts … and the next … and the next.

    • Caroline Andrews

      I do agree in theory, at least, with Whitecoat, but I’m not sure what the answer is. I have good private supplemental coverage for my Medicare, but I think I would still have trouble finding a new doctor if I needed to. My anecdotal evidence from friends tells me that Medicare patients have a huge problem finding a primary care doctor who will take them as new patients, even if they have a good supplemental policy. I assume doctors are afraid these patients may drop those policies in the future. This cut will make the problem worse.

  • Evinx

    A true honor to read a comment from a dr with a healthy amount of testosterone AND cerebral convolutions.

    GREAT comment You are so right!

  • Paul MD

    Yeah, what Evinx said.

    Unfortunately, it’s not a crisis that I can afford to witness.

  • caretaker daughter

    I am a caretaker for my mother who is a cancer survivor.
    She’s finished active treatment and sees her ocologist bi-
    monthly for monitoring. The doctor is hospital based.

    Here is the EOB for her last appointment:

    Doctor charged: $225.00

    Medicare paid: $ 84.90

    2nd ins. paid: $ 72.14

    patient co-pay: $ 21.23

    doctor received: $178.21

    The appt consisted of physical exam, discussion of lab
    tests (if any) and answering questions. The appt is
    between 10-12 minutes. We don’t feel rushed, and we both
    love this doctor and are very appreciative of his care.

    Also, a separate bill is sent from the hospital for a
    facility charge: $136.00. I was told this is for the
    room, supplies, other staff, etc.

    Also the lab bills separately.

    With the proposed 21% medicare cut, the doctor’s reimbursement for this appt would be about $142. Is this amount so low as to be considered a good reason for dropping my mother as a patient? Would it be possible for the doctor to issue a separate bill to make up for his loss? Otherwise, to stay with this doctor, the patient would have to shoulder the whole amount.

  • Vox Rusticus

    Caretaker Daughter, your numbers don’t add up. Secondaries cover the 20% of the Medicare allowable and occasionally the Medicare deductible (Tricare does this) and that is all. If Medicare paid 80% of the allowable, the total for the doctor would be $106.13. Even if the doctor did not accept assignment, which if you say he was paid by Medicare, that cannot be true, the amount is still far short of what you say was paid. The only case where I could see that much being paid would be for materials or medicines dispensed, which if Medicare is paying is likely at best to be a wash (in my field, more like a loss).

    A 21% cut when overhead is at or above 50% translates to a 42% or greater pay cut to me. My costs do not go down with Medicare’s payment reductions. So to help you see it my way, let me ask you, if you were working hard at a job, even one you liked a lot, how happy would you be if your boss came to you and said, “we really like you and so do our customers, but despite the great job you are doing, we are going to have to ask you to take a 40% pay cut”. Think you’d be a little angry about that?

    Sorry, I don’t owe it to your mom or anyone else to work for less than I think is a fair wage. If you cut my insurance and Medicare payments by 21%, I would drop Medicare and any following payer at once. Immediately. Yes, it might be unnerving, but the certain practice death of the alternative would steel my resolve to act. CMS knows this kind of thing would result in collapse of Medicare Part B and very shortly thereafter, of Part A.

    But I agree with White Coat. Bring it on. The crisis would be deeply-disruptive, generational and really society-changing. It would probably also result in the most wholesale change in office in the Congress in the nation’s history, which might not be a bad thing either.

  • pcare doc

    I agree with whitecoat. Let them go through. Then we’ll see who really stops seeing Medicare patients. It won’t be high-paid procedurists and imagers. It will be lower-paid cognates. Then hopefully we’ll see a realization that we need 2 SGRs: one for procedurists and imagers and one for everybody else.

    The AMAs perpetuates the procedurist/cognate income disparity so that it will have a threat: grandma won’t be able to find a PCP. But you could cut fees 21% and grandma can still get a CT and have her cataracts fixed…I’ll bet you anything. Medicare pays way, way more than the market-clearing wage for most procedures and imaging services. Not so for cognitive services.

  • Russ, MD

    I’ve been a physician for 30 years. In the 1980′s: we spent less % of GDP on health care, what we did spend went to patient care, docs spent a lot of time with patients, everyone had insurance, ER call was a reward, not a punishment. What happened? We forgot that most of health care operates in a Complex Adaptive System. We thought we could tinker with it and not have any “adaptation”. We treated it as something complicated, and felt that “models” could predict behavior. Physicians have made a Faustian deal with politicians, and now we are paying the price. The AMA’s concentration on the “fix” while ignoring the disaster of Obamacare is incredibly short-sighted. Docs will be indentured servants, sacrificing their integrity for politically expedient “comparative effectiveness directives”. Patients will think they are getting something for nothing, whereas they will get nothing for something. Medicine, both docs and patients, have to shed this dependence upon government if either of us are to survive. I also say forget the fix: concentrate on delivering value as Porter and Teisberg recommend. Stop attempting to deal with complex problems with complicated solutions! That is what got us in this mess in the first place. Listen to people who can teach Complexity Theory, like David Snowden:

  • Primary Care Internist

    The appt. being 10-12 mins was probably the minority of time totally spent on her care. I’d estimate the true time was closer to half-an-hour, with review of prior records, labs, & scans, consultant reports, ordering and arranging for future follow-up appts and labs/scans, etc., and perhaps even a little research on her condition & guidelines for such.

    I would say I easily spend twice as much on these other activities than actually with the patient face-to-face.

    And this total paid amount to me seems way too high to be an office “E&M” code – instead it probably represents a consultant code. In this case he must also formally communicate, in writing, his findings to the referring doctor (patient’s primary care doc).

    For me, a primary care doc, the typical payment allowed (ie. not including copay & deductible which are only paid fractionally by many coinsurances including medicaid in NY) is MUCH MUCH lower, like half. So if I do 2-3 visits an hour at $50-60 each, which i think is the maximum #/hr to allow for descent care, then yes, that is too low.

    Figure $1000/day gross is about $250k/yr, deduct about half for expenses (malpractice, staff, equipment, utilities etc.) & benefits, and yes I think that is too low. There are MANY MANY civil employees in my area who are making much more than that, with not even a fraction of the training, on-call responsibilities, liability, etc.

    So for all those out there (prominent on this blog) who feel physicians make too much money, I ask you: who SHOULD make descent money? Wall Streeters? Politicians? Lawyers? None of these people contribute as much in terms of productivitiy as physicians. And none has even remotely similar levels of training.

  • caretaker daughter

    Since everybody is doubting the verasity of the figures I quoted from the EOB, I will try to get it scanned, then up it to my flicker account then post the URL for anyone to access it. I thought I read the figures for what they were, but maybe I misinterpreted something.

    As for appt length, ok, maybe it’s 15 minutes, but no more, really. This busy doctor is fast, there’s no hand holding, small talk. My mother has been his patient for 1 specific disease for 6 years, so no mysteries. He has 3 exam rooms always filled with waiting patients already positioned on the exam table before he enters. It’s assembly line, but we feel privileged to have him.

    No one has answered my question about the possibility of doctors privately billing patients for the difference between the charged amount and medicare/2nd ins. payment. We would be happy to do this rather than be dropped, should it ever come to that.

    Thank you for the feedback.

  • Vox Rusticus

    Caretaker Daughter:

    Balance billing above the 20% of the Medicare allowable charge (not the doctor’s posted charge, usually a lot less) is prohibited by federal law. Even if the doctor does not accept assignment (meaning the patient has to pay the doctor at the time of service and then seek payment themselves from Medicare), there is an upper limiting charge that the doctor can collect limited to 115% of the Medicare “allowable”. In those cases, Medicare only will cover 75% of the charge, instead of the 80% under assignment. The only other option is “private contracting,” where the doctor has to notify the patient in writing that his charges will not be subject to any limitations of Medicare payment schedules and that Medicare will not pay the doctor or the patient for any of the services that were provided under the contract. Under those terms, the doctor can charge the patient anything he wishes. He had better wish for a lot of similarly-disposed patients while he is at it, since taking even one patient for one single service under private contract terms excludes the doctor from billing Medicare for any service provided to any patient for a period of two years from the date of the contract. There aren’t many doctors who could do something like that.

    It really is a lousy deal for both the patient and the doctor. The federal government robs the willing patient of her benefits-ones she earned though paying taxes and paying Part B premiums– and her choice of provider. The prohibition also prevents doctors from competitively pricing services to the costs of their particular local market. I have to offer all of my services at the set Medicare rates schedule for my area regardless whether the cost of my providing a service is less than that rate or not. If some services cost more than Medicare allows, I either provide the service at my loss or I just don’t provide the service at all. I can’t charge more even if it costs me more than the payment in the schedule.

    The fairest thing is to allow balance billing with no upper limiting charge. Patients could decide whether paying more out of pocket for a particular doctor was worth it or not. A doctor that schedules longer visits and doesn’t overbook and has convenient appointments but charges more than one with a packed schedule that charges less might be worth more, or not. The problem with our present system is that Medicare denies you the choice. I can’t keep some of my charges at the Medicare rate but others at a higher rate that clears my costs and makes the work worth my time.

  • Cheryl

    As an electrical engineer, I typically worked from 8am Thursday morning until 5pm Saturday evening, going home only for a shower and change of clothes on Friday morning to hide the fact that I had been working all night long. This in addition to the normal 40 hour work week. I also logged in from home at night and woke up several times every night to launch verification simulations remotely using virtual networking software to validate the design and even making design tweaks over my DSL connection when the simulations revealed design problems.

    During the day I had to put up with abuse from managers, cliques of designers who refused to share their techniques for fear of becoming replaceable, no pay raises for year after year, no profit sharing, no retirement plan other than self-funded 401K, and all insurance and retirement benefits regulated by ERISA which basically eliminates the right to sue because there are no punitive damages and no trial by jury when the CEO raids the funds and the insurance companies refuse to pay. Plus I developed degenerative problems from sitting and typing all day and I had to travel to remote design centers regularly, leaving my family at home. We barely got by on my salary here in California where the cost of living is double what it is in the midwest.

    Through it all I had to develop bleeding-edge technology, and all I got for the patents was $4000 split x ways if x number of people worked on the patent. I did not even get a company car to entertain customers and lunches were only tax deductible if a customer was present. I could not depreciate any of my personal computer equipment in my home office because I used it for my employer’s benefit instead of my own and they would only pay for the DSL bill. The dot-bomb crisis eliminated the benefits of speculation and stock options became a sick joke. The collapse of the stock market and the housing bubble destroyed my savings.

    My salary? Less than $125,000, for sure.

    My training? Equivalent to an MD.

    My responsibility? If I made a mistake, I was not subject to a civil law suit that was covered by malpractice insurance. Instead I would lose my job and have to start all over, or even worse, I could still lose my job even if I did everything right, simply because my company was bought by a ‘flipper’ and my job became ‘redundant’ as the market consolidated toward monopoly. I could even lose my job to an H1B visa or an exported technology worker in India.

    Then I went for surgery. The AMA made no effort to help me get insurance coverage for the only effective treatment for my potentially fatal condition. My surgeon could not even be bothered to stick around long enough for me to leave the hospital before I sprung a leak and nearly died, and the doctors who stepped in for him refused to fix the leak either. I ended up genitally mutilated and disabled with unbearable chronic pain, impoverished, eating Meals on Wheels to survive and crawling from my kitchen to my bathroom, and now my employer-provided COBRA insurance will not even pay for my power wheel chair. Not a single attorney wanted to touch my medical malpractice law suit because of the caps the conservatives put on damages, even though my surgeon abandoned me to die while I was still in the hospital.

    Sometimes I think doctors simply have no concept of the fact that the United States is marching down the road to a fascist banana republic and doctors are still near the top of the pig pile and leading the charge with this ‘tort reform’ baloney. Every time I hear a doctor whine about how hard it is to be a doctor I want to puke.

  • Primary Care Internist


    I was an undergrad engineering student in one of the top schools in the nation, with many of my colleagues going on to Ph.D. programs at Princeton, MIT, CalTech, and Cornell. These were funded programs, and did not require anything resembling residency after the degree.They DID NOT have it nearly as hard as my colleagues in med school and especially residency. Now one of my close friends is a Ph.D. nuclear engineer working for a gov’t lab in New Mexico, making way more than a typical primary care doc, without the hassles of running a business. He just got back from Vegas for a taxpayer-funded junket.

    And he gets benefits like you wouldn’t believe.

    In your case, sounds like you should either a) put your money where your mouth is & become a practicing physician; or b) get a government job.

    And the lack of ‘tort reform’ is, I bet, EXACTLY the reason “the doctors who stepped in for him refused to fix the leak”. Sounds like at least your outcome wasn’t good, doesn’t necessarily mean malpractice. But one thing to me is certain – the malpractice environment and the reimbursement/hassle factor are pushing doctors far enough where patient care suffers. Do you really think your doctor wanted that outcome for you?

    And what does the AMA have to do with insurance coverage? It’s YOUR responsibility to have coverage for yourself. Not mine, and maybe not even your employer.

  • Anon

    Agreed. People forget that we went to undergrad too. I graduated with a degree in biomedical engineering, which, with a B.S., starts at about 65k per year. Now on top of that, add 4 years of medical school (at a cost of about 200k) and several years of a residency working 80 hour weeks. Then ask the question that you so brilliantly asked: who should make that much money? Who are we giving these incentives to, that they would dedicate much of their life and take on that much responsibility?

  • AnMar

    Mayte, your unfortunate story is just as sad as Cheryl’s story. The bottom line is that they are both anecdotal playing for sympathy to your respective audiences.

    If your story was the rule, there would be no people applying to medical school. And if a majority of patients were victims of medical horror tales, hospitals and doctors’ offices would be empty.

  • Mayte

    My training after high-school (from which I graduated at the top 3% from an honors magnet program with all AP and IB classes in 11th and 12th grade and 16 college credits by the time I graduated).
    4 year college –graduated with honors (unfortunately my dad insisted that I go to a private college because it was close to home. I got 50% scholarship, but would have gone free to a state college. This one was poor judgement on our part). Major double: Biology and psychology; minor double: chemistry and English literature.
    2 years after college working to pay college debt.
    4 years of medical school.
    3 years of residency. Internal medicine. Worked way more than 80 hours per week (the rule to limit workweek to 80 hours changed after my residency). Not uncommon to go 36 hours or more without ANY sleep and very little food, especially if covering the ICU.
    2 years of fellowship. Endocrinology.
    Then got married. Started paying student loan debt, which was about $250K, the day I started residency. During residency I made less than $30K per year, seldom slept, no social life. Lived like a beggar so that I could make my monthly student loan payments.
    Moved after fellowship because the city that I lived in, my home city, was too expensive. Housing bubble. Moved away from my family to be in a town that I could afford. Luckily got a good job with a hospital based practice. I knew that I could not afford to go into private practice. I spend lots of time with my patients and often go home at 7-8 PM, sometimes later. I’m extremely thorough and I am in high demand. Now that I am known in this area, my consults are booming, but my income just went down due to the change in consult codes from Medicare. No worries, said a politician, see more patients. Oh, I see, I’ll go home at 10PM instead, never see my child, get a divorce, etc. Really?
    Age 35. Decided, better have a baby now or never. Fortunately beautiful baby born. Year later decided to go at it again. Still paying my debt but I learned in residency to live like a beggar. So had 2nd baby. Born premature at 28 weeks. After 3 weeks in ICU, he died due to complications. Reasons given as to why a super healthy woman like myself could have such complications with pregnancy: Advanced maternal age and “you’re a doctor; and your job is very stressful.”
    So the total time of schooling, training and work after high school to get where I am: 15 years. The personal and financial sacrifice: unspeakable. Waiting until age 35 to have children: heart breaking. The death of my 2nd baby because I placed so much emphasis on my career…. cannot even discuss.
    So for all of this sacrifice I have to endure the envy of an incredibly uneducated public because I supposedly “make too much” and because as Cheryl says “tort reform baloney” and I make you “wanna puke”… Really?!
    Soon enough I’ll finish paying off my student debts. Listening to Dave Ramsey and being extremely frugal has paid off. Once my debt is paid off, I’m leaving this profession. The AMA is not a leader and they do not speak for most doctors. The AMA has made doctors into the lackeys of politicians. My IQ is high enough, thankfully, and I can find many other things to do. I’m not going to any longer be the government’s lackey. Thanks…

  • matt

    Do you “bring it on” types have the cash reserves to wait the government out? Why do you think if the patients revolt that will be good for you? The same naivete’ that led your profession to sign on to the third party payor model years ago?

  • Amy

    I’m not a doctor, but much of my family and I work in health care. These cuts will be disastrous not only for doctors and patients, but anyone who works in the health care field.

    One of my friends just lost her job as a nuclear medicine technologist at a cardiology office. The latest payment cuts forced the doctors to discontinue doing myocardial perfusion studies in their office. They were already losing money on every single Medicare patient they did these studies on, but continued to do them as a courtesy to their patients.

    In the past, this office had made up for some of the lost revenue by having their own lab, but the cuts for those services forced them to close the lab years ago.

    Why do we not have any real leadership to address these issues and concerns? Why doesn’t the AMA speak up for the doctors who will be harmed by all of this? The AMA even supported the complete government take over of medical care when gov’t intrusion caused much of this mess to begin with.

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