Congress is actually increasing physician Medicare pay

Recently, the 21 percent cut in Medicare physician reimbursements was replaced with a 2.2 percent pay hike.

Later this year, Congress will have to consider the matter once again, just as it has ever year since 2003. This is the third time this year that Congress has averted Draconian cuts to physician’s payments. What, you might wonder, is going on?

Here is the back-story.  In 1997, Congress enacted a so-called “sustainable growth rate” (SGR) mechanism to keep Medicare physician reimbursement rates in check. Congress has never allowed the full cuts called for under the SGR formula to take effect and it never will.

Why don’t legislators simply repeal the cuts to doctors’ fees that they have been postponing for years? Why just put off the measure for another six months?

Because too few of our elected representative possess the chutzpah to stand up and say that blind across-the-board cuts were an extraordinarily dumb idea in the first place. Nevertheless, most legislators understand that this crude solution will never be implemented. They know that while Medicare overpays for some services, it underpays many doctors. The “Affordable Care Act” that President Obama signed in March recognizes this fact; this is why it provides a 10 percent bonus for primary care doctors (pediatrics, internal medicine, family practice, geriatrics) as well as general surgeons who practice in areas where medical professionals are in short supply.

At the same time, Medicare is reducing reimbursements to doctors who have purchased or leased testing equipment worth more than $1 million for their offices. Research shows that in such cases, doctors order twice as many tests, exposing their patients to unnecessary risks.

Nevertheless, physicians who oppose they like to call “Obamacare” will use the recent postponement to scare seniors by pretending that a sword still dangles over their heads. “I may have to stop seeing you,” some physicians will say. “This reform legislation is going to lead to a Medicare meltdown.”

The day after the Senate approved the reprieve, the Washington Post ran an op-ed by Dr. Michael Newman, a clinical professor of Medicine at George Washington University, who wrote as if the postponement were merely a ruse, and that at some in the future Congress plans on enacting a “21 percent reduction [that] will make it prohibitive for many physicians — internists, geriatricians and family practitioners in particular — to continue caring for their Medicare patients. Congress’s annual moves to postpone further cuts in reimbursement amount to budgetary cosmetics that convince no one of the system’s soundness.”

Newman did not mention the scheduled 10 percent bonus for internists, geriatricians and family practitioners, nor did he mention the 2.2% pay increase that replaces the 21 percent cut.

It’s worth emphasizing that health care reform has nothing to do with the SGR formula that calls for whacking Medicare reimbursements. As noted, this ill-conceived law passed in 1997, long before today’s reformers came on the scene. At the time, legislators never thought it would lead to enormous cuts. The SGR formula compares growth in Medicare payments to physicians to GDP growth. In the late 1990s, GDP was growing nicely. It wasn’t until 2002 — five years after the legislation was enacted — that the formula called for a reduction in doctors’ fees. In the years that followed GDP growth remained sluggish, and the deferred cuts built to 21 percent.

Congress did not attempt to repeal the SGR as part of the Affordable Care Act because conservatives would have argued that this made reform too expensive. But everyone understood that legislators would address the SGR in separate legislation, and now it seems that they are figuring out how to cover the cost of a repeal without adding to the deficit.

In the end, many physicians will benefit from the reform legislation. Granted, some specialists well see reimbursements trimmed for selected very lucrative services. But under reform, all physicians will be eligible for bonuses if they deliver safer more efficient care that lead to better outcomes for patients. And financial incentives that encourage better collaboration among physicians should improve working conditions for many.

Maggie Mahar is a fellow at The Century Foundation and the author of Money-Driven Medicine: The Real Reason Health Care Costs So Much. She blogs at Health Beat, where this post originally appeared.

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  • bladedoc

    If the health care reform is a good idea shouldn’t the administration be proud to call it “Obamacare”. If he believes in it, he should own it.

  • PAULMD

    The Devil is in the details.

    There are many details.

  • http://medicalpastiche.blogspot.com Peter

    “Congress did not attempt to repeal the SGR as part of the Affordable Care Act because conservatives would have argued that this made reform too expensive. But everyone understood that legislators would address the SGR in separate legislation, and now it seems that they are figuring out how to cover the cost of a repeal without adding to the deficit.”

    I find it both humorous and sad that the most comprehensive healthcare reform bill in history did not actually reform the most important factor affecting elderly patient access to healthcare because it would have made the “affordable care act” actually unaffordable.

    P.S., there was no generalized increase in Medicare payments: there was only a corresponding fix for inflation.

  • family practitioner

    Stagnant payments for E & M codes under medicare have been the single most detrimental factor to primary care medicine over at least the past decade. Remember, almost all private insurance rates are tied to medicare rates, so if medicare does not budge, then they do not have to. I support “Obamacare” and do not care what we call it. However, 10 percent raise for primary care is too little, too late.

    • http://www.twitter.com/alicearobertson Alice

      family practioner: I support “Obamacare” and do not care what we call it. [end quote]

      I would write to you privately, but you are posting anonymously. I am sincere, and curious, about why you (as a doctor) support Obamacare. I had a doctor who supported it, but he was from Eastern Europe and used substandard care in his native land as his reasoning (and spent the office visit telling me about his drunken escapades. Pretty funny stuff, but he missed a major diagnosis and played down anything serious).

      Anyhoo….are there a few points that persuaded you to say this?

      • family practitioner

        I support “Obamacare” because the system as it currently stands is non-sustainable. It does not serve my patients well. It certainly has not served me well. In fact, I am close to broke. It makes insurance execs and their shareholders much, much money, including medicare (medicare advantage, anyone?). Many specialists are making out like bandits under the current system, although boy do they kvetch anyway (radiologists, anesthesiologists, orthopedists, just to name a few).

        Yes, reform the system. And let’s try to do it right. Calling it “Obamacare” is pejorative, but go ahead if you must. It is easier than actually having a debate. How about “death panels?”
        Ooooohhhh, scary.

        Let’s have the debate, but let’s do it respectfully and intelligently.

        • Alina

          “Let’s have the debate, but let’s do it respectfully and intelligently.”

          Amin to that!

      • Alina

        “I had a doctor who supported it, but he was from Eastern Europe and used substandard care in his native land as his reasoning (and spent the office visit telling me about his drunken escapades. Pretty funny stuff, but he missed a major diagnosis and played down anything serious).”

        Aha! I see where you’re going with this….Right…Eastern Europe….communism….rationing….substandard care….I’ll give it to them….they are doing a great job!

        We’ve heard plenty of comments about how all the other healthcare systems in every other country are below the one in the US, but this is just the “argument” used by the ones from the industry who make a lot of money and they have no interest in changing the status quo.

        Every other study though shows quite the contrary. Most expensive, not the best.

        If we would have put as much time into truly trying to fix this mess instead of playing politics we would have had a decent solution by now.

  • http://thehappyhospitalist.blogspot.com Happy Hospitalist

    “But under reform, all physicians will be eligible for bonuses if they deliver safer more efficient care that lead to better outcomes for patients. And financial incentives that encourage better collaboration among physicians should improve working conditions for many.”

    Yes, this time it’s going to be different. I know it is. I’m sure it is. It has to be. Why didn’t we think of this before? Those Congress people are so smart, it’s only taken them 45 years to finally figure it out.

    I just can’t figure out why the last set of Congress people were so wrong? How could that have possibly happened?

  • Anon

    While the “unintended consequences” of the SGR as conceived in 1997 may have been unintended, I have my doubts.

    Nevertheless, even if we allow that the draconian cuts in physician pay were somehow accidental or unintended, the idea that somehow the next Congress will finally get around to “fixing it” is ludicrous.

    Of course, it has already been pointed out that it was “too expensive” to include in reform. That much remains true.

    It is also too easy to leave the formula in place and let doctors, like too many piranha fighting over a carcass, look like the bad guys as they each try to claim a fair share, even though nearly all, not some, are underpaid for most the most important services – the cognitive aspects of medicine.

    *EVERY* physician from specialist to primary care physician is UNDERpaid for cognitive care and any “fix” that ignores this, or tries to underpay one specialty to offset increases in another will inevitable be followed by more unintended consequences

    It is also too easy to have doctors breathe a sigh of relief when, instead of a pay cut, they are “rewarded” for their efforts with a nominal raise that barely covers the cost of inflation, and doesn’t even touch the numerous unfunded mandates. The numerous strings attached to the bogus “10% increase” to primary care is a joke. PCPs will have to sprint even faster to meet these guidelines, while distant committees will deem, under arbitrary P4P cutoffs, which ones have “earned” the so called bonuses.

    And what of the so called “penalties” to doctors who order “too many tests” when they purchase expensive equipment? What good can possibly come of that? Instead of quick, easy access to xrays and other tests, patients will have to queue up, European style, for limited access at other venues (hospitals? could they have had a say in this legislation??)

    And where exactly are the data that support this contention: “And financial incentives that encourage better collaboration among physicians should improve working conditions for many.” Should? Should??? Really. Before subjecting physicians to these arbitrary burdens, please, show me the data ..

    • gzuckier

      You have touched on the heart of the matter; doctors (or any providers) are not paid for thinking, or for doing the correct thing (which may be doing nothing); they are paid for doing something, no matter whether it’s the best thing the worst thing, or irrelevant, up to the limits of professional misconduct.

      For example: the person with the sniffles who wants a prescription for antibiotics that will make his cold go away; the patient with a chronic backache due to weight, posture, and lack of muscle tone; the diabetic who needs to learn to manage the disease. In each case, the correct thing for the doctor to do would be nothing (other than the office visit); avoid the risk of prescribing an ineffective and unnecessary antibiotic for a self-limiting upper respiratory virus, avoid the risk and suffering of spinal surgery which is shown by evidence-based medicine to be ineffective, give the diabetic patient the knowledge and motivation to manage the disease and avoid things like amputation of a gangrenous foot. And in each case, the doctor would be paid more for doing more, even though it was the wrong thing. It is to the credit of the medical profession that the vast majority of them adhere to doing the right thing, even though they are punished financially for it.

      It’s a truism in management that the best results are obtained when everybody’s interests are in alignment; obviously this is not the case in the current system of medical care. And this is true whether we go for private or public insurance, single or multiple payers, employee or individual coverage, etc. etc. Until we figure out how to optimally structure rewards for those in the medical professions when the optimal situation would be for the public to have minimal need for or use of their services, we will always be caught between two opposing poles. Remember the sad, idle Maytag repairman in the commercials from a few years back? Imagine all our MDs in that situation.

  • Donald Green MD

    Some of you should look at your private insurers increases. They have been flat for some time. Medicare patients also use 3 times the services non Medicare patients do. They therefore have the potential to increase income even if fees are somewhat lower. The caterwauling around here over Medicare is unwarranted. No hospital could survive without it and practitioners who accept Medicare are among the most prosperous physicians.

    http://www.aafp.org/fpm/2005/0700/p16.html

  • http://www.brucehopperjrmd.com Bruce Hopper Jr MD

    Forget the pathetic “10%” raise for a second. Where in the legislation does it ratchet back the enormous administrative albatross that has directly killed primary care over the past decade?
    There are hundreds of new “agencies”, which add no value, and , in fact, completely demoralize practicing physicians trying to directly care for patients in the trenches. Furthermore, these new administrative offices will “interpret” the legislation set forth so, at this point in time, we still have no clue how this “reform” will play out.

  • Marc Gorayeb, MD

    What is everyone worried about? Physicians won’t see cuts in reimbursement because the new crop of geniuses in the Federal and State governments really mean it this time. They are going to cut $500 billion from Medicare by eliminating ‘waste, fraud and abuse’ and reducing readmissions. Remember that at long last we now have the smartest, most competent people running the government.

  • Pete

    Forgot the loss of consultation codes Jan 1 with it’s estimated reduction in reimbursement to specialists of about 23% for their cognitive involvement. With the “raises” in other codes the expected losses were 3%. However in the real world loses have been about 16%. Bottom line is that over the past 20 years reimbursements have remained stagnant. So what happens – patients are seen twice as fast and are being seen more and more by allied health professionals supervised by doctors. You get what you pay for.

  • http://www.twitter.com/alicearobertson Alice

    Bottom line is that over the past 20 years reimbursements have
    remained stagnant. So what happens – patients are seen twice as fast and are being seen more and more by allied health professionals supervised by doctors. You get what you pay
    for. [end quote]

    And the patient’s wages have remained stagnant during this time period. So, maybe doctor’s wages are inline with the rest of the US civilization?

  • JB McMunn, M.D.

    While overall there may or may not be cuts, the system robs Peter to pay Paul. In order to increase fees to one specialty they have to cut someone else’s fees. In this fashion, they pit us against each other in a circular firing squad, each group arguing why it should get a bigger piece of the pie.

    What we really need to tell them is that this business of “the pie is only so big” is no longer acceptable. They need to bake a bigger pie. If health care costs have been going up it sure hasn’t been because of the spiraling rise in physician fees.

  • http://www.twitter.com/alicearobertson Alice

    I know this thread is about Medicare, but Newsweek had an interesting blip about Medicaid that ties in here. The state actually let those who run the program figure out what to do with the budget. They took it out of the legislature. Ten other states are interested in doing this. As long as it’s taxpayer funded there will be bureaucracy. I believe they saved about 4 million just on preventing C sections. That’s a very good move. Now if they could just stop paying for formula for at least the first six weeks of a child’s life and letting moms do what the vast majority of them can do…….breastfeed…..we would be on the right road.

  • old doc

    Medicare price controls were started in 1984 for those who’s memories don’t go back that far. And in the early 90′s, the Medicare Noose tightened – even John Mccain voted for the SGR. Medicare payments today range from 30 – 60% of the average commercial rate and have not kept up with inflation. Adjusted for inflation, docs practicing in 1990 received higher reimbursement than today. And isn’t Medicaid a government program but payments have been reduced multiple times in many states in 2009 and 2010. Congress is so spineless that they keep doing multiple short term fixes for docs without meaninful increases in reimbursement but continue to reward Banks, Fannie & Freddie, crooked and dysfunctional companies (eg. AGI, GM, Merrill Lynch, etc.), Unions and Wall Streeters. The best way to punish the government is to stop being an enabler by quitting or opting out, at least until your license is mandated to work for free!

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