Optimism on Medicare payment freeze moderated by dismay on permanent fix

As policymakers debated reform proposals during President Barack Obama’s health care summit on Thursday, the AOA continued to urge DOs and osteopathic medical students to call on their members of Congress to prevent the scheduled 21.2% cut in Medicare physician payments from taking effect Monday.

While optimistic that last year’s freeze on the reduction will be extended, AOA President Larry A. Wickless, DO, expressed dismay about the near-term prospects for repealing the sustainable growth rate (SGR) formula used in calculating Medicare payments to physicians.

In a letter sent today to DOs and osteopathic medical students, Dr. Wickless wrote, “[W]e are deeply concerned that actions taken by Congress will only provide a temporary reprieve versus the desired long-term solution we have been seeking for the past decade.”

The AOA and other medical associations contend that the SGR formula is flawed primarily because it is tied too closely to U.S. gross domestic product, which grows more slowly than the use of physician services; inaccurately reflects physicians’ expenditures; and results in geographic payment disparities.

Earlier this week, the U.S. Senate approved a gutted and renamed version of the U.S. House of Representatives’ bill “The Medicare Physician Payment Reform Act of 2009” (HR 3961), which extended the Patriot Act while doing little in relation to its original title. The version of HR 3961 approved by the House, which the AOA supported, would have modified the SGR formula to base Medicare fees for primary care services on GDP+2%, rather than GDP alone, and fees for other physician services on GDP+1%.

With congressional support for comprehensive health care reform wavering this year, the AOA has been focusing its advocacy efforts on enacting Medicare payment reforms. Through letters to lawmakers and a grassroots campaign that includes a YouTube video of Dr. Wickless exhorting viewers to champion a permanent fix to the SGR formula, the AOA has been emphasizing that senior citizens, disabled individuals and military families will lose access to medical care if more and more physicians choose not to accept Medicare patients.

Both President Obama and Kathleen Sebelius, the secretary of the U.S. Department of Health and Human Services, have agreed that the SGR formula is flawed, the AOA’s director of government relations pointed out during the AOA’s town hall meeting last week in Weston, Fla. “But no one has found the right way forward,” Shawn Martin told participants in the combined live meeting and webinar held on Feb. 18 in conjunction with the Florida Osteopathic Medical Association’s annual convention.

If the 21.2% cut is implemented, Medicare physician reimbursement would plummet to a level not seen since the early 1990s, Martin reported, estimating that the negative financial impact on the average practice would be $100,000. If the reduction is averted as expected without a long-term solution to the payment methodology, the cycle of ever-increasing scheduled reductions will continue, amounting to a 26% cut in 2011, a 30% cut in 2012 and a 40% cut by 2015, he said.

In a letter sent Thursday to the full House and Senate, Dr. Wickless stressed, “Our members and their patients are depending upon you to take the necessary steps to enact the one health care reform that will have an immediate and profound impact upon our nation’s health care system—reform of the Medicare physician payment formula.”

Dr. Wickless also noted the difficult choices physicians are facing. “Many will furlough or lay off staff,” he wrote. “Others will limit the number of Medicare and Medicaid patients they accept in their practices. Finally, many will stop participating in the Medicare and Medicaid programs altogether.”

Potential outcomes

During the town hall meeting, Martin outlined the two most likely scenarios for health care reform this year. The House could approve the Senate bill dependent on the Senate accepting revisions to the legislation during a simple-majority reconciliation process. Or health care reform could be dead for the year, to be reintroduced in Congress in 2011, he said.

“I think there will be modest health care reforms in 2010,” Martin predicted. “The challenge is in how they will be defined by the left and right ends of the political spectrum.”

Philip Lee Shettle, DO, an ophthalmologist from Largo, Fla., asked Martin to explain how patients and physicians would benefit from insurance companies being allowed to sell policies across state lines.

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“This would expand the [risk] pool to include more people,” Martin responded. But he noted that letting patients purchase health insurance outside of their home states creates legal complications related to which state would have jurisdiction over the plans and which state would handle grievances.

The dean of the Nova Southeastern University College of Osteopathic Medicine in Fort Lauderdale, Fla., Anthony J. Silvagni, PharmD, DO, asked for an update on the financing of graduate medical education at the federal level.

Neither the House nor the Senate health care reform bills would eliminate limitations on the number of Medicare-funded GME positions, Martin replied, while noting that both versions of the legislation would allow medical residents train in nonhospital settings.

“With national debt climbing rapidly, do you think health care reform will shift from expanding coverage to reducing costs?” asked AOA Trustee Robert S. Juhasz, DO, the medical director of the Cleveland Clinic’s Willoughby Hills (Ohio) Family Health Center.

While reducing costs has become more important, expanding coverage will remain a crucial aspect of any health reform legislation, Martin answered.

Prepping policymakers for summit

In a letter sent to President Obama in anticipation of Thursday’s summit, the AOA, the American Academy of Family Physicians and the American College of Physicians reasserted their priorities for health system reform beyond repealing the SGR formula:

• Permanently increase Medicare payments for primary care services by 10%.
• Fund the pilot-testing and adoption of the patient-centered medical home model of care by Medicare, Medicaid and other payers.
• Create a loan repayment program for frontline health professionals facing shortages.
• Increase the mandated funding for primary care training programs.
• Create a workforce commission to recommend policies to ensure a sufficient supply of primary care and other specialties facing shortages.

In addition, on Wednesday, the AOA and several other physician organizations sent the president and lawmakers invited to the summit a letter underlining the importance medical liability reform.