Fix Medicare's flawed pay system

Without action to stop pending cuts, physicians may be forced to stop taking new Medicare patients.

Editorial. Feb. 14, 2005.

It doesn't take an economic genius to figure out that small businesses that run one of their lines of operation at a loss eventually will have to make some hard choices. That decision is usually to limit or drop the unprofitable part of the enterprise.

This is the choice Medicare could soon force physicians to face. But the money loser in this case isn't some sort of widget -- it's care for patients with disabilities and seniors. Yearly Medicare pay adjustments are simply not keeping up with costs.

Doctors want desperately not to have to make the hard choice that Medicare is pushing them toward -- to trim services for these patients or even stop seeing new patients.

This desire to keep serving Medicare patients has led physicians to put up with inadequate payment for quite some time now. From 1991 through 2005, medical practice costs will have increased by 41%, but payments to doctors will have risen only 18%.

So far, this hasn't caused major disruptions in Medicare patients' ability to get care, according to the Medicare Payment Advisory Commission. But recent MedPAC findings indicate that there are some persistent access problems, usually among patients who are new to fee-for-service Medicare or who have relocated.

These access woes could build into a crisis if payment doesn't pick up. Sadly, the exact opposite will happen unless the flawed physician payment formula is repaired.

Under the current system, doctors are slated for a 5.2% reimbursement cut in 2006 and similarly sized reductions for several years afterward. The result would be payment reductions totaling 31% over the next eight years. At the same time, the cost of running a physician practice and caring for patients is expected to increase 19%.