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In battle to restore Medicare pay cuts, College receives mixed message

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

By William Hoffman

WASHINGTON—As ACP-ASIM continued to press the government to halt this year's 5.4% Medicare physicians pay cut and avert future reductions, it received a mixed message from the Bush administration.

At a College briefing held last month on Capitol Hill, Mark B. McClellan, ACP-ASIM Member and a member of the White House Council of Economic Advisors, told congressional aides and ACP-ASIM officials that the White House recognizes "the significant payment problems facing physicians today." He added, however, that "overall levels of provider payments appear to be adequate. There's no compelling evidence across the board of underpayment."

Dr. McClellan, an internist, also said estimates from the Congressional Budget Office show that rolling back Medicare reimbursements to 2001 levels would cost the government $128 billion over 10 years. That move, he noted, would threaten Medicare's long-term solvency.

ACP-ASIM leaders at the briefing, however, countered that not adjusting physician pay will hurt the program. College President William J. Hall, FACP, said that if Medicare reimbursement cuts continue as planned, physician pay will fall to pre-1991 levels by 2005.


Drs. McClellan (left) and Hall discuss Medicare reform after a recent College briefing.


Throughout the winter, the College and other groups warned legislators that plummeting Medicare payments for physicians will leave some Medicare beneficiaries with no access to care. In a Feb. 28 statement to the House of Representatives Committee on Ways and Means, Subcommittee on Health, Dr. Hall presented data showing that physician pay will fall significantly behind the cost of providing care between now and 2005. (See "The growing gap between Medicare pay and costs,".)

ACP-ASIM echoed its predictions about the problems Medicare cuts will cause physicians and patients in a March 7 statement to the Senate Finance Committee. The College also joined nearly 100 other medical organizations in urging both houses of Congress to pass a bill that would modify this year's 5.4% pay cuts.

Late last month, a flurry of news reports said that some physicians are already refusing to accept new Medicare patients because of low reimbursements. Other physicians have said that while they haven't yet stopped accepting new Medicare patients, they are struggling financially.

At the briefing, Dr. Hall explained that his practice, for example, is having trouble adjusting to the 2002 pay cut, and must leave certain administrative positions unfilled. The office had to convert its phone system to "an airline-style answering service—if you're sick, press 1; if you're really sick, press 3; and then you can get looped back to 1, of course, if you've got the time," he said.

The access argument

While organized medicine agrees that Medicare pay cuts will ultimately hurt beneficiaries, the access argument may be a hard sell in some quarters, explained Robert B. Doherty, ACP-ASIM's Senior Vice President for Governmental Affairs and Public Policy. "There's a perception that physicians cry wolf," he said, "that every time things are cut, we say, 'Access will suffer!' And maybe we've been guilty of that to some extent in the past."

He said, however, that the College will continue to push legislators to modify current and future pay cuts. "We believe that the evidence is compelling, that if fees drop to the degree they are estimated to decline right now, we will have access problems in the future," he explained. "The question is, do we act now or wait until we have a crisis?"

Dr. Hall said the College would settle for a 0.9% pay cut for the current year. But over the longer-term, he said, legislators must change the formula used to calculate Medicare pay to avoid continuing problems.

Currently, physician reimbursements from Medicare are calculated according to a formula that links physician pay to the country's economic growth. The College has long argued that physician payment should not be tied to the state of the overall economy.

Dr. McClellan agreed that the current formula may not promote a system of adequate and predictable physician reimbursement, but he stopped short of endorsing reform or replacement of the current formula.

"We are in favor of working with Congress to find an effective way to improve the performance of physician payment," he said. "We want to do so in a way that doesn't threaten Medicare's long-term sustainability."

Long-term reforms

ACP-ASIM agrees with that approach and has been advocating for Medicare reforms that would both streamline the program and guarantee its solvency. At the March 14 briefing, Mr. Doherty outlined the College's other proposals to change Medicare.

ACP-ASIM has asked HHS officials to lessen physicians' regulatory burdens by reducing and rationalizing paperwork. The College has also called on Congress to pass a Medicare drug benefit that serves the nation's neediest seniors and protested reductions in indirect medical education payments to teaching hospitals.

Mr. Doherty noted that the College has seen legislators embrace some of its ideas, and that reimbursement and regulatory relief proposals have been incorporated into pending or soon-to-be-introduced legislation. He also said that College officials are now aggressively recruiting sponsors for these and other bills.

ACP-ASIM also has its eye on long-term solutions that may be needed to keep the Medicare program up and running. Mr. Doherty said that as the U.S. population ages and Medicare rolls swell, the government may eventually have to raise the program's eligibility age, require wealthier individuals to contribute more, or even increase taxes to prevent Medicare from becoming chronically underfunded.

"I think it's inescapable that at some point we'll need to figure out a way to put more money into the system," he said.

William Hoffman is a freelance writer in Fairfax, Va.

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