In debt crisis, doctors see an opportunity

WASHINGTON — With spending cuts central to the debate on the national debt, health interests are understandably nervous. Advocate for the poor worry about Medicaid. Hospitals already are airing commercials, pre-emptively defending against cuts in Medicare and Medicaid reimbursements.

But doctors’ groups, led by the American Medical Association, have a different outlook. They see the current wrangling over federal deficits and debt as an opportunity to get their reimbursement issue on the table, not off. Even if it’s an issue with a $300 billion fix.

That issue is the “broken” federal payment rates used to reimburse doctors for treating Medicare patients. Starting in January, Medicare is scheduled to cut its reimbursement payments to physicians by nearly 30 percent, a step that doctors say is untenable.

The push and pull over doctors’ Medicare reimbursements is an annual exercise in political brinksmanship, one that the AMA and allies like the Connecticut State Medical Society hope to end. For Connecticut, with its growing elderly population, the issue has a special urgency.

“If Congress does not act in time, doctor fees will be slashed come January 1,” Don Berwick, Medicare’s top official wrote on Friday, as his agency unveiled a proposal to implement the scheduled 29.5 percent cut to doctors’ reimbursements next year.

“Physicians need to know what Medicare will pay and patients need to know that they can continue to see their doctors,” Berwick wrote, noting that Medicare, the government health insurance program for the elderly and disabled, currently serves 48 million people.

Already, almost one in five doctors has started restricting the number of Medicare patients in their practices because of low reimbursement rates and the ongoing threat of cuts, according to the American Medical Association.

Lawmakers and advocates alike fear that if Congress fails to address the cuts-by repealing the formula used to calculate reimbursement rates-Medicare patients will lose access to their physicians, because more and more doctors will stop serving the elderly and other patients enrolled in the program.

Thus the lobbying campaign by the AMA and other groups, including the Connecticut State Medical Society, to get the White House and congressional leaders to fix the Medicare payment system as part of any debt-reduction deal.

“We think it’s better to be on the table now… rather than waiting six months when we fall off the cliff,” said Matthew C. Katz, executive vice president of the Connecticut State Medical Society.

He said this issue is particularly acute for Connecticut. Not only does the state have a large and growing elderly population, many physicians are in small practices that can’t absorb such a big payment cut.

“We’re talking about almost 20 percent of Connecticut’s population,” Katz said, referring to the more than 550,000 Connecticut seniors enrolled in Medicare and the 50,000 military personnel whose health insurance reimbursement rates track the Medicare formula.

That formula dates to 1997, when Congress enacted a law to slow the growth in Medicare spending. As part of that, lawmakers crafted the so-called “Sustainable Growth Rate,” or SGR, which envisioned a series of payment cuts to doctors who serve Medicare patients.

Congress has almost never let those cuts go into effect, postponing them under pressure from lobbyists for physicians and the elderly. But they’ve tacked them on to future years, creating an ever-escalating problem and leading to the staggering 29.5 percent cut scheduled for 2012.

“There is unanimous agreement that cuts of this magnitude would result in serious disruptions for the nation’s elderly and disabled populations and cannot be allowed to occur,” the AMA, the Connecticut State Medical Society, and other doctors’ groups wrote in a letter to President Barack Obama and congressional leaders last week.

There’s no question that the White House and Congress would like to deal with the SGR, resolving the perennial fiscal and political problem once and for all. But it would cost $300 billion to nix the scheduled cuts over the next ten years, and the AMA hasn’t come up with a proposed way to pay that eye-popping bill.

Instead, the pitch of physicians’ groups has been that if policymakers don’t deal with the Medicare reimbursement rates now, the problem will only get more expensive. They note that had Congress repealed the rate cuts in 2005, it would have cost $48 billion over ten years. Punting on the issue has allowed the cost to balloon to the current $300 billion estimate.

Waiting a few more years, the AMA notes, will add another $200 billion to the problem. The AMA argues that in reality, the SGR is part of the current deficit problem, but it’s just been kept “off the books” because lawmakers have refused to deal with it honestly.

Any genuine debt deal can’t ignore it yet again, says the doctors.

“A credible budget agreement cannot include a Medicare budget baseline that assumes draconian physician payment cuts of almost $300 billion,” the doctors groups wrote in their letter. “An agreement on the debt ceiling legislation provides the best-and perhaps only-opportunity to ensure stability in Medicare payments, ensure continued beneficiary access to care, and address the SGR deficit in a fiscally responsible manner.”

The AMA has proposed repealing the rate cuts and putting, in their place, a five-year payment schedule that includes increases to reflect medical inflation. At the same time, they’ve called for testing “new payment models” through demonstration and pilot projects, that would improve coordination of care and bring down health care expenditures. It’s unclear how much that proposed solution would cost.

“We’re not saying leave it as is,” Katz said. “We recognize we need to incentivize quality-based care and shift away from defensive medicine.” But until a more sensible payment system can be crafted, he said, doctors need “a period of stability” and time to adjust to other changes coming down the pike as part of federal health reform.

But the AMA’s proposal could be an extremely tough sell, as the White House and Republicans in Congress haggle over massive cuts to domestic spending, possible tax increases, and new curbs on entitlement programs like Medicare. Other ideas about how to deal with the SGR aren’t nearly as generous as the AMA’s outline.

For example, the bipartisan debt commission has called for a proposal under which doctors would have to accept some reduced reimbursements and seniors would have to pay more out-of-pocket costs. Another proposal, touted by the White House, would strengthen the Independent Payment Advisory Board, an entity established by the new health reform law to limit the growth of Medicare spending. IPAB could make the cuts in provider payments that Congress has been so loath to enact.

Katz and others said their campaign to inject the SGR issue into the debt debate was not an effort to short-circuit these other, harsher proposals. “We are being proactive in talking about it now,” he said. And it makes sense to address this issue as part of this wide-ranging discussion about annual federal deficits and the debt.

Katz said he’s optimistic about a solution, pointing to a recent proposal by Sens. Joseph Lieberman, a Connecticut independent, and Tom Coburn, an Oklahoma Republican, to deal with the debt in part by overhauling Medicare. The Lieberman-Coburn proposal includes a three-year repeal of the SGR, which the two senators said would give Congress enough time to come up with a long-term solution.

Katz said its evidence that lawmakers across the political spectrum agree “now is the time to talk about this.”

Katz didn’t mention another Lieberman-backed proposal, called the Commitment to American Prosperity, or CAP Act. That measure could force binding, across-the-board spending cuts to a bevy of federal programs if lawmakers can’t agree on a debt deal. Among other things, the CAP Act would slash Medicare spending-including provider payments-in a move that AMA has said would be devastating to the program.