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Recasting the debate on Medicare physician payments

From the January-February ACP Observer, copyright 2006 by the American College of Physicians.

By Robert B. Doherty

Congress closed out its 2005 legislative year without taking final action to halt Medicare fee cuts. The result? The scheduled 4.4% payment cut caused by the flawed sustainable growth rate (SGR) formula went into effect Jan. 1.

What's even more exasperating is that the cuts took effect despite both the House and Senate passing identical measures to extend the 2005 Medicare physician payment rates through 2006. Unfortunately, final approval of that measure—which would freeze payments at 2005 levels and avert the deep cuts—got sidetracked by unrelated procedural issues in the last days of the legislative session.

Procedural delays

The measure to halt fee cuts was included in a conference agreement on a larger budget reconciliation bill, which went to both the House and Senate for a vote the week of Dec. 20. The House of Representatives voted first, approved the bill and then recessed for the rest of the year.

The Senate passed the bill three days later--but changed it slightly from the House version, which means that the House has to vote on that revised version before it can become law. Because the House of Representatives had already left town by the time the Senate voted, ACP and other physician groups urged Rep. J. Dennis Hastert (R-Ill.), Speaker of the House, to summon House members back to vote on the revised bill before the Medicare cuts took effect. Instead, Congress adjourned for the year, and the budget bill—along with the provision to halt physician pay cuts—won't be finalized until the House reconvenes later this month.

Physicians and patients have every reason to be frustrated that Congress failed to take decisive and timely action. Congress had all year to act to avert Medicare cuts, and it is inexcusable that patients will have to suffer because lawmakers waited until the 11th hour to fix an obvious problem.

All is not lost, however. It is likely that the House will approve the revised budget bill when it returns within the next few weeks. That will bring final approval to the provisions that will halt the fee cuts and restore Medicare payments to 2005 levels.

Further, Congressional leaders have indicated that physicians will likely be made "whole" for any losses they sustain in the interim. At the same time, physicians will still have to deliver care while paying office expenses and making payroll, so every day of additional delay has an immediate, adverse impact on physicians and their patients. ACP will continue to urge Congress to return as quickly as possible to finish the budget legislation it started.

Assessing the outcome

Even when Congress does finish the job, the results will fall far short of what is needed. While restoring payments to 2005 levels is certainly better than taking a 4.4% hit, Medicare payments will continue to lag behind growing practice expenses.

Even worse, the reprieve will be only temporary, because payments in calendar year 2007 will revert to the flawed SGR formula—unless Congress acts before the end of this year.

Because 2006 is a Congressional election year and cuts in Medicare aren't likely to be popular with voters, Congress will be under considerable pressure to act before voters go to the polls in early November. Maybe, just maybe, Congress won't again wait until the absolute last minute to decide.

But reversing this year's cuts and preventing another round for next year is not the solution to Medicare's chronic payment problems. ACP will challenge policymakers by proposing fundamental and comprehensive reforms, not piecemeal, last-ditch efforts. To do so, we will organize our advocacy agenda around the following premises:

  • Quality improvement and pay for performance will fail if delivery and payment structures remain unchanged;

  • health care delivery should center on patients' needs, not payers';

  • well-trained internists, with the right office systems and adequate reimbursement, provide the best value to patients;

  • reimbursement should reward physicians for "doing better," rather than just "doing more";

  • payments should recognize the value of time spent with patients and of physician work associated with coordinating care and providing preventive patient services; and

  • fixing the looming supply crisis of primary care physicians is essential to improving quality.

The College will be releasing a series of sweeping policy papers built around each of these premises.

One paper, "Linking Physician Payments to Quality Care," was approved by the Board of Regents in October and released in late December. The paper advocates for payment system changes to provide substantial financial incentives.

Early in 2006, the College expects to release a new paper proposing an exciting new model of health care delivery and financing, through what we are calling the "advanced medical home" practice.

The model would give internists the opportunity to qualify for additional reimbursement, above the usual Medicare payments for an office visit, for providing services centered on patients' needs. The "medical home" model would, for instance, compensate physicians for work associated with coordinating care for patients with multiple chronic diseases.

And in April, the College plans to release new national workforce policy that will detail the critical role internists play in meeting current and projected patient needs. That policy will include recommendations for reversing the decline in the number of physicians choosing to enter general internal medicine.

Also in April, ACP will issue a comprehensive position paper proposing specific remedies to the dysfunctional Medicare physician payment system. Those proposals will include alternatives to the SGR, changes in the way Medicare determines the relative values of physician services, increased payments for evaluation and management services, expanded coverage for services that fall outside of the traditional office visit, additional incentives for care coordination by a patient's personal physician, and new codes and payment policies that recognize the value of services provided by internists.

Changing the status quo won't be easy, because there are many—including many within medicine—who benefit from the current payment system. However, the alternative is for ACP to concede that the best we can do is replace another round of SGR cuts with a freeze or nominal increase. I believe ACP members—and their patients—expect more of us and of Congress.

Robert B. Doherty is ACP's Senior Vice President for Governmental Affairs and Public Policy.

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