AMA Sounds the Alarm, Medicare Making Yet Another Attempt to Cut Reimbursement

The American Medical Association (AMA) must once again don its armor, this time preparing to go to battle on behalf of its approximately 240,000 members over pending cuts to Medicare reimbursement.  Physicians received below-inflation updates in 2004 and 2005 and zero percent updates in 2006 and 2007.

Without congressional action, Medicare physician payment rates will be reduced 10 percent effective 1 January 2008.  By 2016, the cuts will total about 40 percent, while practice costs are expected to increase by 20 percent.

In addition to steep pay cuts, the AMA charges that the Medicare physician payment update formula:

• has kept average 2007 Medicare physician payment rates about the same as they were in 2001
• prevents physicians from making needed investments in staff and health information technology to support quality measurement
• punishes physicians for participating in initiatives that encourage greater use of preventive care in order to reduce hospitalizations
• has led to a severe shortfalls in Medicare’s budget for physician services that have driven Congress to enact short-term interventions with funding methods that have increased both the duration of cuts, as well as the cost of a long-term solution
• hurts access to care for America’s military families, has payment rates in the Department of Defense’s TRICARE program are tied to Medicare rates

An AMA Physician Payment Action Kit is available for more information and the AMA Physician Grassroots Network to receive updates on physician payment rate legislation.

The impacts of Medicare physician payment cuts in New England are significant:

• New England physicians will lose $306 million for the care of elderly and disabled patients in 2008 due to the 10 percent cut in Medicare payments beginning 1 January.  The region’s physicians will lose $12.1 billion for the care of elderly and disabled patient by 2016 due to eight years of cuts
• 149,461 employees, 2,007,382 Medicare patients and 234,343 TRICARE patients in New England will be affected by these cuts
• 42 percent of New England’s practicing physicians are over 50, an age at which surveys have shown many physicians consider reducing their patient care activities

• Compared to the rest of the country, Connecticut, Massachusetts, Rhode Island, and Vermont, each at 14%, has an above-average proportion of Medicare patients
• Compared to the rest of the country, Maine, at 17%, has the second highest proportion of Medicare patients and, at 17 practicing physicians per 1,000 beneficiaries, has a below-average ratio of physicians to Medicare beneficiaries, even before the cuts take effect
• In 2008, on top of the 10 percent cuts across the country, the "Southern Maine" Medicare payment area faces cuts of an additional 1.1 percent, the "Rest of Maine" Medicare payment area faces cuts of 2.1 percent; New Hampshire faces cuts of an additional 1 percent; and, Vermont faces cuts of an additional 1.7 percent

Countering the congressional inaction and the resulting 10 percent rate cut, the AMA is advocating a 1.7 percent increase in reimbursement in 2008, in line with the estimated practice cost increase; long-term, the AMA wants Congress to create a new reimbursement formula.

Over-stepping their role as a payment mechanism and forgetting that they’re not actually providers of medical care, the talking-heads of the health insurance industry charge that physicians are partly to blame, contributing to costs by ordering unnecessary and expensive services.  Mohite Ghose, spokesman for the insurance trade association, America’s Health Insurance Plans, was even disingenuous enough to question whether physicians are always providing "appropriate services at the right setting at the right time."

BLOG Medicine must concur with the AMA’s statement that, "utilization of physician services is not the cause of the Medicare program’s financial predicament, and cuts in physician payment rates are not the way to improve Medicare’s financial sustainability."  Congress needs to bring up the house-lights and call a close to this "annual dance of death" — it’s time to pay the piper.■