Recently, the Medicare Payment Advisory Commission (MedPac) voted 15 to 2 to recommend a “doc fix” for the Medicare reimbursement crisis that organized medicine views as the makings of another crisis.
MedPac is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission’s statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.
The MedPac plan, which requires Congressional approval, would repeal the controversial sustainable growth rate (SGR) formula for setting physician reimbursement and avert an SGR-triggered pay cut of 29.5% on January 1.
Several large medical groups including the American College of Cardiology (ACC), American Medical Association (AMA), and the American Osteopathic Association (AOA) have come out against the MedPac proposal already.
MedPac Proposal
To offset the estimated $300 billion price of this “doc fix,” as it is called on Capitol Hill, MedPac recommended freezing reimbursement rates for primary care physicians for 10 years while cutting rates for specialists by 5.9% for 3 straight years, followed by zero growth during the next 7 years.
According to an article in Medscape, written by Peter Carmel, MD, “pinching Medicare rates this way would raise roughly $100 billion toward financing the doc fix. MedPac comes up with another $235 billion in proposed cuts to Medicare Part D drug plans, post–acute care facilities, hospitals, laboratories, suppliers of durable medical equipment, Medicare Advantage plans, and other providers, along with reduced benefits for seniors.”
MedPac recommended this package of measures despite dire warnings from organized medicine that the proposed cut-and-freeze approach to rates would drive many of their members out of Medicare and jeopardize access to care for seniors. Medical societies have routinely predicted the same scenario if SGR-triggered pay cuts were to take effect.
In an October 3 letter to MedPac, AMA and 42 other medical societies criticized the proposal, pointing out that since 2001, Medicare reimbursement rates have increased by 4%, but practice costs have grown 6 times as fast, at 24%. The commission’s reimbursement proposal, they argued, would put physicians further in the hole as practice costs continue to rise, making it harder for them to invest in the kind of care coordination, chronic disease management, and quality improvement envisioned in healthcare reform.
Compounding the payment cuts proposed by MedPac are other Medicare policies that could reduce physician reimbursement, according to the medical societies. Some of those could take the form of penalties for not reporting quality measures to the Centers for Medicare and Medicaid Services (CMS) or for not adopting electronic health record technology, both of which require physician investment.
Response to MedPac Proposal
Medical societies have responded in disapproval to the MedPac proposal. American College of Cardiology (ACC) CEO, Jack Lewin, MD, asserted that the ACC “strongly opposes the MedPAC proposal as a solution to the flawed SGR physician payment formula.” He maintained that the “proposal is not an acceptable or sustainable solution to the SGR and does nothing to promote quality or resource stewardship.”
He further added that the proposal “somewhat misaligns the interests of primary and specialty doctors, rather than focusing on incentives to work together to improve quality, efficiency, coordination of care, and outcomes.” Instead, he called on Congress to replace the SGR with “a payment system that promotes high quality, cost effective care,” and to look “for a more viable solution to the SGR since if implemented, the proposal will cause some real problems by placing a major divide in medicine, hurting Medicare beneficiaries’ access to medical care, and inevitably leading to higher costs of care.”
It was noted that, “Dr. Lewin’s remarks reopen a traditional rift between primary care physicians and their specialist kin about who is getting a fair shake in Medicare reimbursement policy. The MedPac plan places most of the financial sacrifice on specialists, because the services subject to 3 straight years of cuts account for 92% of Medicare spending on physician services.”
Similarly, “The American Osteopathic Association (AOA) believes that this proposal would have a chilling effect on our health care system, particularly on Medicare and its beneficiaries.” AOA was troubled that the proposal “would divert so dramatically from its longtime position that all physicians participating in the Medicare program should receive annual increases in their payments.” Specifically, AOA opposes cuts to other physician services as a means of financing such increases.
Other medical societies have argued that instead of asking physicians to make unreasonable sacrifices, Congress could finance a doc fix with other budget offsets already identified by the Congressional Budget Office, the Senate “Gang of Six, and the presidential deficit reduction commission.
“The AMA strongly opposes the Medicare physician payment recommendation voted on by MedPAC,” said AMA President Peter Carmel, MD, in a press release. “Offsetting part of the cost of [the SGR formula] repeal through drastic cuts and long-term freezes to physicians falls far short of what is needed to preserve patients’ access to care.
The American College of Emergency Physicians, the American College of Physicians, the American College of Surgeons and the American Psychiatric Association, also sent MedPac a letter urging a revision of the commission’s September proposal. The groups asserted that they could not “support this plan in its present form because it retains many of the SGR’s flaws, undermines physicians’ ability to participate in payment and delivery reforms and calls for payment rates that the Commission itself has previously said could reduce Medicare beneficiaries’ access to medical care.”
The president of ACP noted that, under MedPAC’s proposal, “primary care physicians would actually experience a net loss, as their payment updates would not be aligned with inflation. In addition, ancillary services and possibly hospital visits by primary care physicians would experience a cut of almost 17 % over the next three years.”
Opponents also fear that implementing the MedPAC Proposal “could hurt the new payment systems Medicare is trying out, such as accountable care organizations (ACOs). “Even at currently projected benchmarks based on today’s payment rates, interest in forming ACOs has been limited,” the letter argued. “It is hard to see how a benchmark that assumes a 10-year freeze in physician updates would improve the prospects for shared savings that might mitigate the impact of payment reductions.”
Conclusion
There is a reasonable chance that the Congressional Joint Select Committee on Deficit Reduction, the so-called super committee, which is tasked with recommending $1.5 trillion in savings that Congress must enact by December 23, will take up the MedPac proposal. However, “organized medicine is lobbying the super committee to repeal the SGR formula, but not pay for it MedPac-style.”