American College of Physicians: Internal Medicine — Doctors for Adults ®

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Using strength in numbers to fight a Medicare pay cut

From the January ACP-ASIM Observer, copyright 2002 by the American College of Physicians-American Society of Internal Medicine.

By Phyllis Maguire

Working with most of organized medicine, ACP-ASIM leadership and staff have been fighting to roll back a bruising 5.4% Medicare physician payment cut scheduled to take effect at the beginning of this month.

While public policy officials worked with legislators, thousands of College members participated in an intensive letter-writing and key contact campaign. The goal was to get Congress to pass a bill—the "Medicare Physician Payment Fairness Act of 2001"—that would cut the payment reduction to a more manageable 0.9%.

The College worked as part of a coalition that included more than 1 million health care professionals—including nonphysician health care personnel—lobbying for the payment fairness bill. While the outcome of the proposed legislation was unclear at press time, the solidarity displayed by medical organizations showed the strength that can exist in numbers.

"We learned that when we speak with one voice on an issue, medicine can exert immense influence," explained Robert B. Doherty, the College's Senior Vice President for Governmental Affairs and Public Policy.

Longstanding fight

The College's efforts are just the latest round in a fight ACP-ASIM has been waging for several years. Since 1997, the Washington Office has urged the Centers for Medicare and Medicaid Services (CMS), formerly HCFA, to change the way it calculates physician payment updates.

The trouble started when the Balanced Budget Act (BBA) of 1997 decreed that the government should update physician pay using a formula known as the sustainable growth rate (SGR). Because the SGR is an economic indicator based partly on the gross domestic product, it immediately raised concerns. The College has consistently argued that physician payment updates should not be linked to economic factors wholly unrelated to medical costs.

Making matters worse, inaccurate data were used to project the SGR, an error that the College vigorously opposed. CMS began using more accurate data to calculate the SGR last year, but the College continued to lobby both CMS and Congress to stop using the formula to update physician pay.

When the economy was booming, physician pay updates remained relatively good. Now that the nation's economy has entered a recession, however, the flaws in the SGR-based formula are hurting physicians.

As late as last summer, information from CMS and the Congressional Budget Office indicated that physicians would face a flat payment update for 2002, not a loss. When it became clear in November that the update for 2002 would reduce physician payments, ACP-ASIM urged CMS to use its authority to correct flaws in the update calculations. CMS responded, however, that only Congress could make conversion factor changes.

Legislators responded to the medical community's lobbying efforts by introducing versions of the "Medicare Physician Payment Fairness Act of 2001" in both the House and the Senate. The proposed legislation would reduce physician payments by only 0.9% for 2002. In addition, the bill would charge the Medicare Payment Advisory Commission with devising a different formula by March 1, 2002, for determining annual updates.

New solidarity

The College joined more than 75 other organized medical groups in urging legislators to pass the bill, creating an unusual level of solidarity among the health care community.

Organized medicine's new unity was made possible in part by earlier changes the College advocated. In the mid-1990s, the government used different formulas to create payment updates for different providers, keeping separate fee schedules and conversion factors for different types of doctors.

Since 1997, however, all medical providers have been covered by a single conversion factor and fee schedule. As a result, not only have all the physician societies weighed in on the pay cut issue, but trade organizations representing optometrists, physician assistants and physical therapists have as well.

While physician and nonphysician providers still sharply disagree about scope-of-practice issues, for example, they put their disagreements aside to present a united front on shared issues like payment updates.

The same broad coalition efforts also helped lead to the House of Representatives' unanimous passage of the "Medicare Regulatory and Contracting Reform Act of 2001" last month. That bill would help reduce the hassle factors that plague physicians and allied health professionals alike.

"We will continue to disagree on scope-of-practice issues, or on how to divide the physician payment pie," Mr. Doherty said. "But we've learned to work together on issues that cut across specialties and professional fields."

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