New York Times Examines Planned Physician Payment Reductions in Medicare
The New York Times on Monday examined how doctors "are mobilizing a nationwide lobbying campaign to stave off cuts in their Medicare fees." According to the latest annual Medicare trustees' report, CMS plans to cut Medicare physician payments by 4% to 5% in each of the next six years, resulting in a cumulative fee reduction of 26% by 2011.
The cuts, which are built into the formula used to calculate Medicare payments to doctors, have been included in President Bush's official estimates of federal spending and the deficit. HHS Secretary Mike Leavitt said that keeping Medicare physician fees at the 2005 level would cost about $110 billion over 10 years, increasing the federal deficit by that amount and raising beneficiaries' premiums by $35 billion.
However, the American Medical Association says that Congress must reverse the planned cuts, warning that the fee reductions will hamper physicians' ability to serve Medicare beneficiaries. Doctors say the higher payments are needed because they are spending more for supplies, office personnel and malpractice insurance. To spread its message, AMA has launched a campaign to lobby Congress to reverse the cuts. The campaign includes lobbying by patients and posters in doctors' offices warning that the cuts will threaten beneficiaries' access to care.
Glenn Hackbarth, chair of the Medicare Payment Advisory Commission, has said that the existing Medicare payment system has serious flaws.
Rep. Nancy Johnson (R-Conn.) said, "The current Medicare payment system for physicians is unsustainable. We cannot allow Medicare's payments to doctors to fall through the floor while the cost of providing care continues to rise."
Rep. Pete Stark (D-Calif.) said Congress should proceed with caution, noting that physicians should be able to maintain or increase their incomes even with the planned reductions by increasing the number and complexity of services they provide.
Ron Pollack, executive director of Families USA, said that while "[r]ising Medicare costs have a direct impact on premiums," if "payments to doctors are cut significantly over several years, beneficiaries could have problems gaining access to physicians, especially in rural areas."
John Rother, policy director for AARP, said that a modest increase in Medicare payments to physicians might be warranted but added that the costs "should not be factored into the premiums for beneficiaries."
Richard Pollack, executive vice president of the American Hospital Association, warned that any efforts to address physicians concerns should not include payment cuts to hospitals.
William Dombi, vice president of the National Association for Home Care, also warned against financing an increase in physician payments by imposing a copayment on home health services (Pear, New York Times, 4/4).
According to some experts, last week's announcement that Medicare spending on Part B services increased 15% in 2004 will "intensify efforts" to tie physician payments to quality, CQ HealthBeat reports. According to a House aide, the new data show that the cost of preventing the scheduled physician fee reductions will be far higher than the previously-estimated $9.7 billion over five years. He said the new data make it "a lot harder" to enact temporary fixes because they show the need for fundamental changes in the Medicare physician payment system.
According to CQ HealthBeat, "key lawmakers are likely to express greater urgency" about switching to a pay-for-performance system. CMS should be "careful" and "deliberate" about enacting reforms, though pay-for-performance systems are "well-established" in the private sector, CMS Administrator Mark McClellan said (CQ HealthBeat, 4/1).