Medicare Pay Cut Averted but Uncertainty Remains for Physicians

Doctors can breathe a sigh of relief as a Medicare pay cut of nearly 30 percent is narrowly averted - at least temporarily.

On New Year’s Day, Congress approved a “fiscal cliff” bill that includes a one-year delay of the scheduled Medicare pay cut - to the tune of 26.5 percent - due to the flawed sustainable growth rate (SGR) formula.

The bill also includes a two-month delay of an additional 2 percent cut to Medicare pay due to across-the-board spending cuts scheduled as a result of Congress’ failure to reach a budget deficit deal in 2011, according to Medscape.

Medical organizations, consultants, and physicians expressed tempered enthusiasm regarding the SGR delay.

While the AMA praised Congress for avoiding the massive pay cut, it criticized its continued failure to identify a permanent SGR fix.

" ... Congress' work is not complete; it has simply delayed this massive, unsustainable cut for one year,” AMA president and psychiatrist Jeremy A. Lazarus said in a statement. “Over the next months, it must act to eliminate this ongoing problem once and for all.”

Lazarus went on to say that the “last-minute action” to delay the SGR cut is a “clear example of how the Medicare program is increasingly unreliable for physicians and patients.”

That increasing unreliability is already affecting physicians and patients. In Texas, for instance, the number of physicians accepting Medicare patients dropped from 78 percent in 2000, to 58 percent in 2012, according to a recent survey by Texas Medical Association. That decline in Medicare-accepting physicians would certainly have accelerated throughout the country if Congress had not delayed the SGR pay cut Tuesday.

In fact, a May 2010 AMA survey of more than 9,000 physicians who care for Medicare patients found that one in five are already restricting the number of Medicare patients they treat. The top two reasons? Medicare payment rates are too low, and the ongoing threat of future payment cuts makes Medicare an unreliable payer.

“Continuing a delay year after year is stunting growth of new doctors to the Medicare system,” Bradley Reiner, a consultant with Reiner Consulting and Associates based in Driftwood, Texas, told Physicians Practice via e-mail. “Many are questioning why they would join a government program with too many hurdles and hoops.”

When it comes down to it, Congress had “little choice” but to delay the SGR cut, Greg Mertz, director of Healthcare Strategy Group based in Louisville, Ky., told Physicians Practice via e-mail. “If a 27 percent cut were allowed to take place, even for a few weeks, physicians would refuse to accept Medicare patients and that would be political suicide,” he said.

Lou Goodman, president of The Physicians Foundation, told Physicians Practice in November that a failure to avert the pay cut would be disastrous for all patients, not just those with Medicare. That’s because it could force already financially over-burdened physicians to retire or close their practices.  “I think the summary sentence would be that people have insurance coverage access but they don’t have availability, there’s no doctors to take care of them,” he said.

Pennington Gap, Va.-based family physician J. Scott Litton, Jr., a fellow Practice Notes blogger, shares the same fears as Goodman. “Physicians would not be able to keep their medical practices viable after absorbing a 27 percent decrease in reimbursements,” he said via e-mail. “Not only would that [reimbursement decline] have happened with Medicare, but many of the commercial insurance companies that base their reimbursements as a percentage of Medicare would have decreased their payments as well,” he said.

In response to the fiscal cliff bill, the Medical Group Management Association-American College of Medical Practice Executives (MGMA-ACMPE) also reiterated the need for a permanent SGR fix. Temporarily delaying the pay cut “only perpetuates another year of uncertainty for physician practices forced to continue their work under the dark cloud of looming SGR cuts and the new threat of sequestration cuts scheduled for March,” internist Susan L. Turney, MGMA-ACMPE president and CEO, said in a statement. “... Physician practices need a stable, predictable Medicare payment system to allow them to make sound, long-term decisions to invest in their practices, position themselves for the future, and provide the highest quality care to the Medicare patients they serve.”

Mary Witt, senior vice president of The Camden Group, a healthcare management and consultant group based in El Segundo, Calif., agrees that the uncertainty due to the SGR “makes it very difficult for physicians to do any long-term planning, especially anything that would require an increase in capital expenditures.” More specifically, she told Physicians Practice via e-mail that it could be inhibiting practices from exploring new delivery models, such as the Patient-Centered Medical Home, or new technology, such as an EHR implementation or upgrade.

In fact, a recent MGMA-ACMPE survey of more than 1,000 physician group practices illustrates that is exactly what's happening. The most commonly cited reason among respondents for not participating in new payment and delivery models was lack of payment predictability due to the looming SGR cut. 

The uncertainty brings with it other consequences. Sixty percent of respondents said they had reduced staff salaries and/or benefits due to the uncertainty surrounding the SGR, 60 said they had delayed purchasing clinical equipment and/or new facilities, and 36 percent said they had reduced clinical staff.

As Litton said, the last-minute SGR fix is becoming the “usual norm” for doctors, but that doesn’t make it any easier. “It causes angst and frustrations with physicians because we have no way of planning for the future,” he said. “We need to have guarantees that we will be able to adequately care for our patients that need us.”

What permanent SGR fix would you propose to Congress?