Victory on Medicare physician pay

The AMA was successful in its campaign to avert the 10.6% Medicare physician payment reduction.

Editorial. Aug. 11, 2008.

This summer, physicians' and patients' voices were finally heard. In a dramatic turnaround, Congress on July 9 passed legislation preventing a massive Medicare physician payment cut. Then on July 15, the House and Senate stood up to President Bush and overrode his veto of the bill.

In the end, doctors' and patients' urgent message -- don't jeopardize Medicare by allowing the pay cut to stand -- overwhelmed the opposition, spearheaded by the nation's health plans.

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The bill would not have become law without the intense efforts of organized medicine, individual doctors and the public. Working through the American Medical Association's Grassroots Action Center and Patients' Action Network, 760,000 doctors and patients contacted their lawmakers on the issue this year.

Back in June, when Senate leaders fell one vote short of the 60 necessary to end debate on the bill, the AMA's effort to get the measure passed swung into overdrive. Its campaign included television advertisements in six states where Republican senators voted against the measure.

The effort paid off handsomely. Nine senators changed their vote -- clearing the way for the bill's July passage. Five of the nine who switched positions were targeted by the Association's ads.

The veto override means that physicians' Medicare payment is secure for 18 months. For the last half of the year, doctors will be paid at the same rate they have been getting since January. A 1.1% increase will kick in next year. That's a far cry from the 10.6% cut for the last half of 2008 and an estimated 5.4% reduction in 2009 that would have gone into effect without this action.

By preventing the cuts, Congress avoided a physician access crisis. In an AMA survey of 9,000 doctors, 60% said they would have to limit the number of new Medicare patients they could treat if the reductions went through. Their practices simply couldn't have handled the financial hit.

The new law also contains other important Medicare provisions. These include an extension of a measure that boosts rural physicians' payment, bonuses for quality reporting, a phase-out of higher patient co-pays for mental health services, an expansion of the medical home demonstration project and increased payments for anesthesia teaching programs.

Lawmakers took the sensible approach in paying for reversal of the physician payment cut. The law creates savings by applying a consistent set of networking and contracting rules across all private health plans operating in Medicare. This eliminates an unfair marketing advantage enjoyed in some areas by Medicare private fee-for-service plans, which cost the program more than its traditional fee-for-service component. The law also cuts indirect medical education payments to Medicare plans that duplicate funds paid directly to teaching hospitals.

Although the Medicare payment situation has been stabilized for now, the job is not finished. The Congressional Budget Office estimates that the flawed Medicare payment formula will result in a 21% cut in 2010. A reduction of that magnitude could not come at a worse time -- one year before the first wave of the nation's 78 million baby boomers reaches Medicare eligibility.

If lawmakers don't act, program payments to doctors would drop 40% over the next decade, while practice costs will rise an estimated 20%. The problem would extend beyond Medicare into the private market, where many insurers tie their rates to the program's pay.

The cuts would be financially catastrophic for physician practices. Access would suffer as many physicians would be forced to make the painful choice to restrict the number of Medicare patients they could see.

Congress must use the next 18 months wisely and come up with a permanent solution to the payment problem. Short-term patches must stop. The Medicare payment formula needs to be scrapped and replaced with one that reflects the yearly rise in the cost of practicing medicine.

Let's keep the momentum going and repair the physician payment system for good.

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