Doctors grapple with Medicare payment cuts: 5.4% decrease in 2002

OB/GYN News,  Feb 15, 2002  by Jennifer Silverman

• E-mail
• Print
• Link

Facing a 5.4% decrease in Medicare payments for 2002, primary care physicians are finding it harder than ever to maintain their practices and provide care for their older patients.

Dr. Cecil Wilson, an internist in Winter Park, Fla., wonders how he'll manage in the wake of this new payment cut. Although one-third of his patients are on Medicare, when he takes into account whom he sees on a day-to-day basis, those patients represent two-thirds of his entire practice.

Attempting to care for these many Medicare patients with a 5.4% decrease makes no sense, he said. Dr. Wilson plans to continue to treat his Medicare patients, "but there will be physicians who take other options, like retiring or reducing their participation in Medicare."

While it's too soon to project the impact of this pay cut, the American College of Physicians-American Society of Internal Medicine estimates that general internists are going to lose $138 million this year off of their evaluation and management codes alone.

ACP-ASIM doesn't condone its members dropping Medicare patients, and that's unlikely to happen in most cases, said its president, Dr. William Hall. "Where there might be some attrition is when Medicare-eligible patients need to switch their providers. Some physicians might be more reluctant to take on new Medicare patients."

Medicare burnout has Dr. David Abend a family physician, thinking seriously about reducing his hospital and inpatient workload when he opens a new practice in March. "There is no amount of money that comes close to the hard work and hours we put in as primary care physicians in inpatient cases," said Dr. Abend of Emerson, N.J.

The payment cut is also going to affect the quality of care and quality of time physicians spend with their patients, said Dr. Tim Tobolic, a family physician in Byron Center, Mich.

"I've talked to a lot of physicians and they're having difficulties making ends meet from these cutbacks--not just in Medicare" but from all sectors of the health insurance industry, he said. "I don't know how physicians are going to be able to do this anymore."

Dr. Wilson is concerned that private payers will follow Medicare's lead, "causing a ripple effect as they ratchet down their payments."

An income decrease of this kind will affect a physician's entire practice, not just his patient load, Dr. Neil Calman, president of the New York City-based Institute for Urban Family Health, told this newspaper.

Facing a diminishing income, physicians pay their staff less and hire less-qualified staffers. They don't renovate their offices, upgrade their equipment, and "they don't take students and residents in their offices because they don't have the time," he said.

Tom Scully, administrator of the Centers for Medicare and Medicaid Services, isn't too worried about the impact of the pay cut--at least not yet. At a Jan. 16 press conference, he emphasized that 87% of all physicians still contract with Medicare. "In general, I think the physician payment system works really well-- and can be fixed. I'm hoping it's a short-term problem."

The agency attributes the decrease to a "mistake" in the physician payment formula that essentially overpaid physicians for the years 1998, 1999, and 2000.

In his meeting with reporters, Mr. Scully reiterated what CMS officials have been saying for some time: that Congress sets the formula, not the agency. At its interim meeting, the American Medical Association pushed hard for its members to support a bill (H.R. 3351) that seeks changes to the Medicare physician payment formula.

The ball is already rolling on Capitol Hill to address--and possibly change--the Medicare conversion factor. Provisions in the conference report to the Fiscal Year 2002 Labor, Health and Human Services appropriations bill (P.L. 107-116) and in H.R. 3351 directed the Medicare Payment Advisory Commission (MedPAC) to study ways to update the formula.

At a January meeting, MedPAC approved recommendations to update payments for physician services by 2.5% for 2003, and replace the formula's sustainable growth rate (SGR) with a factor that more fully accounts for changes in the unit costs of providing physician services.

The recommendations will appear in a March 1 report to Congress. The AMA is already urging Congress to swiftly approve the MedPAC recommendations.

Kevin Hayes, MedPAC's research director for Part B Services, said it's too early to tell what Congress is going to do. "There's no question that replacing the SGR is going to cost money."

Acknowledging that the formula leads to unpredictability in payment, Deborah K. Williams, professional staff with the House Ways and Means' health subcommittee, informed a health policy meeting in January that hearings would be held to examine whether the formula should be replaced.

Getting support in Congress to change the formula shouldn't be that hard, Dr. Hall said. "The system is flawed, whether we get more or less money next year."

COPYRIGHT 2002 International Medical News Group
COPYRIGHT 2008 Gale, Cengage Learning