Medicare cuts and final SCHIP legislation

This column was originally published in AMA eVoice on September 13, 2007. Dr. Davis is president of the American Medical Association.

Negotiations are underway on Capitol Hill to piece together final legislation that would reauthorize the State Children's Health Insurance Program (SCHIP), and the AMA is working to ensure that the agreement includes provisions to avert scheduled cuts in Medicare physician payments for two years. Time is getting short; under current law, cuts will total 40 percent by 2015—starting with a 10 percent cut on Jan. 1.

Both the U.S. House of Representatives and the Senate passed separate bills last month to reauthorize SCHIP, and the House version—known as the Children's Health and Medicare Protection (CHAMP) Act—received strong AMA support for its inclusion of stipulations that would replace the Medicare physician payment cuts with positive updates. Now the AMA is leading an aggressive lobbying endeavor that emphasizes to the Senate the urgency of addressing the cuts in final SCHIP legislation.

As part of this effort, state medical associations and dozens of specialty societies signed a letter earlier this week urging Senate Majority Leader Harry Reid, D-Nev., to include two years of positive Medicare physician payment updates in a final SCHIP conference agreement. That follows similar letters sent to House and Senate leaders Sept. 7 by the AMA and AARP that ask for critical Medicare improvements for physicians and beneficiaries from the CHAMP Act to be included in SCHIP legislation.

Meanwhile, this ad (PDF, 134KB) has appeared in the Capitol Hill publications Congressional Quarterly and Roll Call this week to point out the "fairness gap" that exists because of government overpayments to private Medicare Advantage plans. The ad asks the Senate to level the playing field between traditional Medicare and Medicare Advantage, and preserve access to care for seniors and military families.

To spread the word beyond the nation's capital, the AMA National House Call campaign will visit Washington state, New Mexico and Kansas in the next two weeks to highlight the need for Senate action to prevent the Medicare physician payment cuts.

In recent weeks, I've heard from several physicians who disagree with the AMA's support of the CHAMP Act. A major criticism is that the bill doesn't provide a permanent fix for the annual Medicare physician payment problem. But this legislation certainly would improve matters. About $20 billion would be allocated to avert cuts of 15 percent over the next two years, and cuts of 40 percent over the next nine years would shrink to cuts of 25 percent from 2010 to 2012.

The CHAMP Act also has brought the Medicare physician payment issue to the legislative forefront much earlier than in recent years, when Congress has waited until the last minute to take action and created a take-it-or-leave-it situation for us.

This legislation also would prospectively remove physician-administered drugs from the flawed Sustainable Growth Rate formula, and adjust the targets to account for new Medicare coverage decisions. And it would extend expiring provisions that increase payments to rural physicians. 

The CHAMP Act does have its warts, including restrictions on physician-owned hospitals, payment cuts and new requirements for imaging services, and authority for the federal government to reduce payments for high-volume services. Please know that the AMA is feverishly lobbying to change those aspects of the bill.

To learn more about the pros and cons of the CHAMP Act, download this summary of the bill (PDF, 82KB) from the AMA.

It's not yet known whether SCHIP and Medicare legislation will advance in one bill or as separate legislative packages. While the negotiating process continues to unfold, I ask that you remember this: While we don't control the legislative process, together we can influence the outcome. I think our efforts are going a long way toward doing exactly that.

Please send comments, questions, and replies to amaprez@ama-assn.org.