Congress Votes Another Delay in Large Medicare Cuts

It has become a familiar story, and an expensive one.

Congress once again postponed—this time, for one month—a scheduled across-the-board cut in Medicare physician payments. The reduction of a stunning 24.9 percent will go into effect on January 1, 2011, unless Congress heeds the demands of organized medicine for a permanent fix to the Medicare physician payment formula.

(The 24.9 percent payment cut was mandated by the 2011 Medicare Physician Fee Schedule Proposed Rule, issued earlier this year.)

On November 18, Senate leaders agreed to a 31-day reprieve from the 23 percent Medicare physician payment cut that was scheduled to take effect on December 1, and on November 26 the House of Representatives followed suit.

The congressional action followed urgent lobbying by physician groups and a “White Coat Wednesday” coordinated by the AMA in which physicians around the nation flooded Capitol Hill with phone calls on Wednesday and Thursday, November 17 and 18. The event was originally scheduled for one day, but the response was so great—the AMA estimated that about 10,000 phone calls were made to congressional offices—that it was extended for another day.

Credit: Jolene Butts Freeman

The AMA is hoping Congress will hold off on the 2011 pay cut for a full year to provide time for legislators to work out a permanent fix to the payment formula, especially the sustainable growth rate (SGR) component of that formula. The SGR requires that increases in expenditures by the government for physician services be offset by decreases in physician payment.

With remarkable regularity since 2003, the formula has called for ever more substantial pay cuts, only to have them postponed by Congress following lobbying by individuals and doctor and senior-citizen groups. But each postponement adds to the mounting costs to the government; at APA's Institute on Psychiatric Services in October, APA Director of Government Relations Nicholas Meyers said each month the cut is postponed, the cost to the government is $1.3 billion, so that the price tag for another 13-month postponement would be on the order of $16 billion.

Yet pay cuts of the kind now demanded by the payment formula will make it difficult for many physicians to continue treating Medicare patients. Meyers noted at the institute that for psychiatrists, the pending cut in payments would mean a reduction on the order of $20 per service per CPT code.

So APA, AMA, and other physician groups continue to demand a complete overhaul of the formula.

“Congress is to be congratulated for once again deferring an ill-conceived payment cut in Medicare payments to physicians,” APA President Carol Bernstein, M.D., said. “However, we urge our lawmakers to finally enact a permanent fix to the SGR so that both doctors and patients can focus their energies on the critical issues of health care reform and implementation of parity.”

APA leaders active in the AMA House of Delegates have been vocal as well. “Congress must be willing to act on a replacement to the SGR payment method,” said Patrice Harris, M.D., chair of the AMA's Council on Legislation and a member of the Section Council on Psychiatry (the psychiatric delegation to the AMA House of Delegates consisting of APA, the American Academy of Child and Adolescent Psychiatry, and the American Academy of Psychiatry and the Law). “Some people refer to this effort as a ‘doctor fix,’ but it's really about ensuring access to health care for our patients. It is increasingly impossible for physicians to participate in Medicare without fair and adequate reimbursement,” she said.

“Physicians are very worried about being able to care for older Americans and veterans under the Medicare and Tricare plans,” added Kenneth Certa, M.D., also a member of the Section Council on Psychiatry. “The SGR formula was put into place in the late '90s to try to limit the costs of these programs. Unfortunately, limiting payment to physicians does not mean the cost of providing care will be limited. The rise in overhead costs alone far exceeds what the SGR supports. Congress has recognized this time and again, delaying implementing the cuts that the SGR mandates.

“Physicians will be unable to continue to care for this important population,” Certa told Psychiatric News. “They cannot afford to pay their office staff, rent, equipment costs, and their own expenses—often hundreds of thousands of dollars of medical school debt. Seniors and veterans could lose access to care.”