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

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What should physicians contribute to deficit reduction?

From the November/December ACP Internist, copyright 2011 by the American College of Physicians

By Robert B. Doherty

Under a new law intended to reduce the national debt, Congress has until Dec. 23 to come up with more than a trillion dollars in budget savings. If it can't agree on where to get the savings, across-the-board cuts equally divided between defense and domestic programs will automatically take effect.

As Congress deliberates on where to get the savings, physicians are being asked what they are willing to contribute. The idea is that everyone, including physicians, patients, drug companies and health insurers, has to do their part to cut health care spending. For patients, this may mean higher cost-sharing and reduced benefits. For physicians and other providers, it may mean reduced payments.

But physicians also are being asked to help pay for repeal of the Medicare Sustainable Growth Rate (SGR) formula. The Congressional Budget Office estimates that it will cost almost $300 billion over the next 10 years to repeal the SGR. To reduce the budget cost, the Medicare Payment Advisory Commission (MedPAC), which advises Congress on payment policies, proposes to cut payments for some physicians and freeze others, and use the savings to lower the cost of SGR repeal.

MedPAC called for a 10-year freeze in the annual payment update for primary care physicians' office- and other outpatient-visit codes. Payments for all other services would be cut by nearly 17% over the next three years, followed by a freeze for the rest of the decade. MedPAC estimates that this would lower the cost of SGR repeal by about a third, or about $100 billion. The remaining two-thirds, or $200 billion, would come from cuts to drug companies, Medicare Advantage plans, and possibly beneficiaries through higher cost-sharing.

MedPAC reasoned that this approach would help ensure access to primary care services, make the cost of SGR repeal more palatable to Congress, and not require as deep a set of offsetting cuts to other nonphysician stakeholders. And, it argued, since SGR repeal would benefit physicians by preventing even deeper scheduled cuts, they should pay a portion of the cost.

The American College of Physicians told MedPAC that it would not support this because the plan would not ensure access to primary care and could create severe access problems for other specialties. In the case of primary care, a decade-long freeze on updates would mean that payments would actually decrease after inflation, following the past 10 years during which increases have not kept pace with costs. And the MedPAC proposal would cut ancillary services such as diagnostic testing by primary care physicians by 17%, the same cut as for all other non-primary care services.

For non-primary care physicians, the 17% cut would apply to all of their services. Included in the cut would be the already undervalued cognitive services provided by internal medicine subspecialists, many of whom provide a substantial amount of primary care to their patients. The cut would apply no matter how efficiently or efficiently they deliver care, regardless of whether they are in a specialty that is in undersupply or oversupply, and regardless of whether their services have been found by any objective standard or evidence to be overvalued.

ACP argued that if payment for some physician services is to be reduced, those reductions should be based on an evidence-based assessment of value, not on an arbitrary percentage cut. For instance, payments for services that have high value to patients, that is, those that contribute to good outcomes delivered effectively and efficiently, might be greater than payments for services with lower value.

Regardless of the fate of MedPAC's proposal, policymakers will continue to ask what physicians are willing to do to lower health care spending. Although it may be unfair to expect them to help pay for an SGR shortfall that was not their doing, physicians clearly have a role in determining how much the country spends on health care. As Atul Gawande wrote in “The Cost Conundrum,” his now-famous June 1, 2009, New Yorker article, “Health-care costs ultimately arise from the accumulation of individual decisions doctors make about which services and treatments to write an order for.”

The best contribution that physicians could make to deficit reduction, then, would be to lead a national effort to save much of the $700 billion that experts say is wasted annually by the U.S. health care system on treatments and tests that have little or no value to patients, like imaging for low back pain, or that are highly preventable, like unnecessary hospital admissions and readmissions.

To this end, ACP has proposed to Congress that a national, physician-led, multistakeholder initiative be established to promote high-value care. The initiative would promote research and sharing of information on the comparative effectiveness of different treatments, changes in incentives for clinicians and patients, and strategies to reduce the costs of defensive medicine. And while physician leadership is essential for the initiative to succeed, consumers, health services researchers, government, and private payers would also need to be involved.

Across-the-board payment and benefit cuts might help Congress reduce the budget, but at a cost of reduced access. Reducing the costs associated with low-value care could save much more and improve outcomes to boot.

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