Given current budget woes, 2012 could be the year Congress finally allows the SGR to dictate massive cuts to physician payments
Each year the cuts to physician reimbursement for Medicare services that are required by Sustainable Growth Rate of the Balanced Budget Act of 1997 keep getting larger and larger. And each year Congress has stepped in at the last minute to “rescue” doctors and patients from these drastic cuts. But this “doc fix” is merely a punt, not a solution, and we’re running out of room on the field. Or, if you prefer a feline metaphor, I’d say our nine lives are almost up and physician payments are finally about to bite the dust. Any way you look at it, the delays are about to come to an end. With potential cuts in Medicare mounting up to as much as $300 billion dollars in a budget that is already strained to the max, congress and the administration see physicians as a possible way to cut the budget. The time may be near when CMS will make good on its threats.
Never mind that the SGR formula makes no sense. The formula starts with Medicare as a percent of GDP and only allows it to stay at that percent or risk cuts the following year. The problem, of course, is that the number of seniors requiring services is rising every year. Physician compensation, as a function of units of service per recipient, has been falling for years. In other words, for the percent to remain stable, physicians need to drop the compensation per patient every year. The SGR formula simply codifies this simple math mistake. So there are only two ways to reduce the total outlay for physician services, cut the number and type of services to seniors or cut the reimbursement to physicians. And guess who wins that battle. (There’s a period there, because it’s not a question.)
Consequently, on July 1, CMS released the proposed rule and fee schedule for 2012. And this year the RVU conversion factor, the dollar multiplier used to determine the rate of reimbursement for all physician services, has been reduced from $33.98 to $23.94, an across the board cut of 29.5%. Of course, CMS is making noise that they intend to investigate and increase the rate of payment for “potentially misvalued codes.” As a part of these efforts CMS plans to re-evaluate the non-E/M codes to determine if they are undervalued. Many of us who spend a disproportionate amount of our time doing diagnostic work welcome the potential of increased recognition and compensation for non-procedural work. Some might even take some encouragement from Jonathan Blum, director of CMS, who said, “We believe strong efforts are needed to evaluate Medicare’s fee schedule to ensure that it is paying accurately and ensuring that Medicare beneficiaries continue to have access to vital services, such as primary care services.” According to CMS, this is the first time that the agency has looked across all specialties.
Many feel that these adjustments giving primary care a bigger piece of the pie are appropriate and long overdue, but that may be hollow consolation as the total pie shrinks dramatically. Others see this as a naked attempt to divide the house of medicine against itself, yet another version of class warfare. But this time it’s the family practitioners and the pediatricians against the thoracic surgeons and radiologists.
The administration has given mixed messages on its position on the mandated cuts. On the one hand, Dr. Donald Berwick, the current CMS administrator, has stated that “This payment cut would have serious consequences and we cannot and will not allow it to happen . . . We need a permanent SGR fix to solve this problem once and for all. That’s why the president’s budget and his fiscal framework call for averting these cuts and why we are determined to pass and implement a permanent and sustainable fix.” However, President Obama has also indicated that all the savings in Medicare could and should come from providers. Should this end up being the administration’s prevailing point of view, where should we expect the cuts to have the greatest impact?
Obviously, hospitals that have a disproportionate rate of Medicare patients will be hurt the worst. Some wealthier hospitals and doctors may decide, as a few already have, that they can no longer afford to continue to participate in Medicare. This may lead to the re-emergence of the small private hospital. This will, in turn ‘skim the cream’ off the paying population, putting further financial pressure on inner city and community hospitals. Teaching programs, especially subspecialty programs, that depend on financial subsidies could contract their number of training positions or dry up all together.
The move to in-patient care being provided by hospitalists could accelerate even faster as medical staff give up their hospital privileges in preference for private pay clinic practices. Medical staff who continue to accept Medicare, out of loyalty to their patients or the need to sustain a marginal practice, will likely cut back the number of Medicare patients or stretch out their appointments. The obvious impact on emergency medicine could be that more Medicare patients will end up in the ED, possibly later in their disease state than before.
The announcement from CMS provides a mechanism for comments and lists names of administrators and their phone numbers to answer questions and provide feedback. But for physicians this may turn out to be no more than picking out the suit you plan to be buried in. The better course, for the nation, for our patients, and for emergency medicine might be to scrap the SGR all together and draft legislation that will compensate physicians in a fair and sustainable method.