NPR

What Health Law Didn't Fix: Medicare Doctor Pay

Call it Medicare's version of Groundhog Day.

For the third time this year, Congress has just days to avert a scheduled 21 percent cut in pay to doctors who treat seniors and others on the Medicare program. And while just about everyone agrees a cut of that magnitude would be devastating for Medicare and the patients it serves, no one seems to be able to figure out how to solve the problem in anything except a stopgap way.

How It Began

The trouble actually dates back to 1997, when Congress passed a balanced budget law that put the current formula in place determining how doctors will be paid. The idea was that if doctors as a group cost Medicare too much, their pay would be docked to make up the difference in future years.

But James Rohack, president of the American Medical Association, says it was clear from the start that the "sustainable growth rate" would be anything but.

"We want to keep people healthy, and this formula penalizes [doctors] for doing the quality care you want," Rohack says.

For example, he says, "by keeping people's blood sugars under control, or helping them stay out of the hospital when they have heart failure," doctors may save Medicare money overall, but run up overall physician spending that then triggers future physician pay cuts.

Finding Physicians Who Take Medicare

And if those cuts get big enough, people worry that over time there will be more patients like Janice Jessup, a Medicare beneficiary in Virginia Beach, Va.

The last time Jessup needed to find a new primary care doctor a couple of years ago, she says she called as many as 40 doctors all over town. And what did they tell her?

"They weren't taking Medicare patients anymore," she says.

Jessup, who had severely cut her leg and ended up needing substantial follow-up care, eventually went to a walk-in clinic where she did get the care she needed. But it wasn't the care she wanted.

"It isn't the full medical attention you need with a primary physician. No lab tests or anything," she says.

'Chaos' For Doctors

From the doctors' point of view, however, it's not hard to see why they're getting more reluctant to take on new Medicare patients.

"We haven't had a raise in seven years," says Joseph Stubbs, the immediate past president of the American College of Physicians, which represents more than 100,000 internists.

Stubbs says as professionals, doctors feel a strong sense of duty to continue to care for their Medicare patients, even when profits erode. But at some point the balance will tip, he says, including for his own group of nine doctors in Georgia.

"We're having to face, well, if those cuts go into effect, we need to cut personnel," he says. "It will cost us, instead of reimburse us, to take care of Medicare beneficiaries."

And Congress has now made matters even worse, Stubbs says, by delaying the cuts not a year at a time, but -- because of complicated federal budget rules -- only by a month or two.

That's because making the cuts disappear entirely would add to the federal deficit at eye-popping amounts. An estimate issued last week by the Congressional Budget Office said merely canceling projected cuts in Medicare pay for doctors over the next decade -- without giving them any increases -- could cost $276 billion over the next decade.

But the short-term fixes have left physicians wondering what their income might be, and what to tell patients.

"It is absolute chaos for us as business people," Stubbs says. "What business could deal with not knowing whether your price is going to be up in the next month, or the same, or be cut by 21 percent? It's no way to be able to plan."

Searching For A New System Isn't Easy

Groups representing patients want to ensure that there are enough doctors to serve Medicare beneficiaries. But they're wary about the doctors' prescription for fixing the problem, which calls for repealing the current formula in its entirety.

"We don't just want to just remove all limits on what doctors can charge. That's a good way to get to bankruptcy," says John Rother of the senior group AARP.

Still, Rother agrees with the physician groups that Congress has not been fair about its handling of their Medicare payments.

"No one would defend a month at a time. Even a year at a time is problematic. So we certainly believe if it can't be permanent, it ought to be a multiyear fix," he says.

Physicians, not surprisingly, are a bit more emphatic about what they want from Congress, particularly after the issue got punted from the recently enacted health overhaul bill because of its price tag.

"From a fiscal standpoint, when they say they, 'Well gee, we can't do it because it will add to the deficit,' well, the reality is every one of these temporary patches has grown the deficit," says Rohack. "They could have fixed this three years ago for less than $50 billion."

Now the number is rapidly approaching $300 billion.

So the search continues for a new system that would pay doctors on Medicare fairly, but neither too much nor too little. That search has, so far, been elusive.

And the latest delay in the cut expires on May 31.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, host:

Doctors who treat Medicare patients will face a huge pay cut, 21 percent, unless Congress acts by the end of this month. It's the third time this year that doctors, seniors and lawmakers have faced the issue. Just about everyone agrees that such an abrupt change in payments could have a devastating effect.

NPR's Julie Rovner explains.

JULIE ROVNER: What worries people most about the possibility of such a big cut in Medicare payments to doctors is that it will produce more people like Janice Jessup. She's a Medicare beneficiary in Virginia Beach, Virginia. The last time she needed to find a new primary care doctor a couple of years ago, she says she called doctors all over town.

Ms. JANICE JESSUP: Twenty-five, 30, 40, something like that - an awful lot of doctors.

ROVNER: And what did they tell you?

Ms. JESSUP: They weren't taking Medicare patients anymore.

ROVNER: Jessup ended up going to a walk-in clinic, where she got the immediate care she needed.

Ms. JESSUP: But it isn't the full medical attention you need with a primary physician - you know, no lab tests or anything.

ROVNER: From the doctor's point of view, however, it's not hard to see why they're getting more and more reluctant to take on new Medicare patients.

Dr. JOSEPH STUBBS (Immediate Past President, American College of Physicians): We haven't had a raise in seven years.

ROVNER: Joseph Stubbs is immediate past president of the American College of Physicians, which represents more than 100,000 internists. He says, as professionals, doctors feel a strong sense of duty to continue to care for their patients, even when profits erode. But at some point, the balance will tip, he says, including for his own group of nine doctors in Georgia.

Dr. STUBBS: We're having to face, well, if those cuts go into effect, we need to cut personnel. It will cost us, instead of reimburse us, to take care of Medicare beneficiaries.

ROVNER: And Congress has now made matters even worse, Stubbs says, by delaying the cuts not a year at a time, but by only a month or two. That's left physicians wondering what their income might be and what to tell patients. Stubbs calls it chaos.

Dr. STUBBS: What business could deal with not knowing whether your price is going to be up in the next month, or the same, or be cut by 21 percent? It's no way to be able to plan.

ROVNER: So how exactly did we get here? Well, the problem dates back to a law passed by Congress in 1997. John Rother is with the senior group AARP.

Mr. JOHN ROTHER (AARP): Well, I think it's good intentions gone awry. The intent was to limit what we pay doctors to a sustainable growth rate, SGR.

ROVNER: For the first couple of years, the new limits worked pretty well. Doctors actually got fairly generous raises. But then the limits started to bite. In 2002, they started calling for cuts in doctor pay.

Congress let that happen the first year, but then it worried that if the cuts continued, doctors would stop taking Medicare patients. So lawmakers started voting to make the cuts go away, at least temporarily, only there the was a problem: budget rules meant that cancelling the cuts added money to the federal deficit. And the longer the cuts got delayed, the bigger the price tag got.

Mr. ROTHER: Each year, the threatened reduction is so unmanageable that we can't even figure out how to pay for it.

ROVNER: That led Congress shorten the delays from two years to one year, and now to a month or two at a time. But while it's a real emergency for those involved, Rother says the problem hasn't registered much on the national radar.

Mr. ROTHER: So it's really hard to explain and really hard for anyone to understand, who's not in the middle of it.

ROVNER: But those who are in the middle of it, like the American Medical Association, are furious with Congress for letting it get to the point where whether or not doctor pay will be cut is decided on a month-to-month basis. James Rohack is the AMA's president.

Dr. JAMES ROHACK (President, American Medical Association): From a fiscal standpoint, when they say, well, gee, we can't do it because it will add to the deficit, well, the reality is every one of these temporary patches has grown the deficit. They could have fixed this three years ago for less than $50 billion. Now it's over $210 billion. It'll continue to grow if they don't deal with the actual formula.

ROVNER: But the doctor's proposed fix - to repeal the current formula in its entirety - isn't a good solution, either, says Rother of the AARP.

Mr. ROTHER: We don't want to just remove all limits on what doctors can charge. That's a good way to get to bankruptcy.

ROVNER: So the search continues for a new system that would pay doctors on Medicare fairly, but neither too much, nor too little. That search has, so far, been elusive, and Medicare patient Janice Jessup did finally find a primary care doctor late last year, but she doesn't know if he'll continue to see her if this latest round of cuts takes effect.

Ms. JESSUP: I'm afraid to ask. I just bless him for taking me.

(Soundbite of laughter)

ROVNER: The latest delay in the cut expires on May 31st.

Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

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