Medicare Physicians Nervously Await Yearly ‘Doc Fix’

The holiday tradition of congressional tinkering with the equation determining Medicare provider payments is making physicians all over the country nervous this year, especially in California.

A particularly polarized Congress, working in the wake of the debt panel’s failure to reach an agreement to cut the deficit, has until the end of December to make a temporary adjustment in Medicare payments, as it has each of the last eight years. Without the annual act of Congress known as the “doc fix,” physicians will take a payment cut of 27.4% for services delivered to Medicare beneficiaries.

The sustainable growth rate formula — which was approved by Congress in 1997 — determines how much Medicare should pay physicians based in part on the state of the economy.

For the first few years, the SGR was fairly accurate in estimating how much Medicare would cost. But starting in 2003, health care prices rose much more quickly than the general economy, and Congress has had to make annual adjustments to prevent cuts to Medicare provider payments, usually at the end of the year. The adjustments have grown each year. Last year the potential cutback was 20%.

In California, physicians are worried not only by the size of the potential cut this year, but also by what they perceive as an adversarial climate in Washington.

“There is a lot of concern this year,” said Steven Green, family physician in San Diego and president-elect of the California Academy of Family Physicians.

“We’ve had a lot of these sorts of threats in previous years, but it’s never happened yet. We can get a little complacent and think that they’ll fix it at the last minute again, but if they actually go through with the cut, it would be devastating for the system. You couldn’t take a cut of almost 30% and continue business as usual. A large number of California physicians would be unable to afford to keep seeing Medicare patients.”

Will Is There, But Way Forward Is Less Clear

Elizabeth McNeil, vice president of federal government relations for the California Medical Association, said the will to repair the SGR — both temporarily and long-term — is there in Congress, but how to do so is less clear.

“Every member and every leader in Congress we’ve talked to has told us, ‘There’s no way we want a 27% cut. That would be drastic,'” McNeil said.

“But the question is: In the next three weeks, in a very dysfunctional Congress, can they find a funding source? That’s going to be the hard part,” McNeil said.

So far, there is no bill in Congress to put this year’s “doc fix” to a vote. Congress has a busy December with major decisions about the future of unemployment compensation, the postal service and tax cuts. It is possible that several issues — including the “doc fix” — could be combined into one year-end bill.

At least one member of California’s congressional delegation — Rep. Wally Herger (R), chair of the House Ways and Means Subcommittee on Health — is confident lawmakers will pass another temporary fix before the end of the year.

“The flaws of Medicare’s sustainable growth rate are well-known,” Herger told California Healthline. “If the scheduled cuts to physician payment rates are allowed to take effect, many physicians may stop participating in Medicare and senior citizens could find it more difficult to find a doctor willing to treat them.”

“Congress has enacted legislation to avert scheduled cuts to physician payment rates that have been called for under the SGR every year since 2003, and I have full confidence that we will pass legislation to avoid next year’s scheduled cuts,” Herger said.

“Ultimately, however, we need to get away from short-term patches,” Herger added. “That is why I’ve held a hearing in the health subcommittee on longer-term physician payment reforms, and I’m hopeful that Congress can work together to create a permanent solution in the near future.”

Rep. Henry Waxman (D-Calif.) — former chair of the House Energy and Commerce Committee and now ranking Democrat on the committee – agreed that a new long-term formula is needed.

“The sustainable growth rate system for Medicare physician payments must be replaced with a sustainable, fair policy that encourages coordinated care,” Waxman said in an email response to questions. “I have long fought hard to fix the sustainable growth rate system and will continue to press for Congress to take action before it adjourns. To leave the problem unaddressed is unacceptable to our doctors, their patients and to the Medicare program.”

‘This Comes at the Worst Possible Time’

Richard Thorp — a primary care physician who heads a small group practice in the Sierra foothills town of Paradise – said the timing for any cutbacks is bad, particularly one as large as 27% and particularly in a state like California where managed care is so prevalent.

“This comes at the worst possible time,” Thorp said. “It’s impossible to make plans when you have this big a hit looming. We have to be thinking about electronic record systems and expanding our practice because of reform. It’s impossible to recruit in this kind of environment.”

Thorp said cutbacks in Medicare reimbursement — whether they come now or in the future — will hit California physicians harder than physicians in other parts of the country.

“Most of the other states have not gone through the managed care changes we have, and they don’t have the same relationship to federal payers that we do in California.”

California health officials say Medicare cutbacks in physician reimbursements will affect more than just physicians.

“There will also be a trickle-down effect if this is allowed to happen,” said Bonnie Burns, training and policy specialist for California Health Advocates, a Medicare education and advocacy organization.

“If you have docs who aren’t seeing as many patients as they used to — or who have simply left their practice — you aren’t going to have as many orders for all the ancillary services. Radiology would take a pretty big hit, so would some of the clinical labs and probably specialists wouldn’t be getting as many referrals,” Burns said.

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