Medicare reimbursement forumla threatens access to physicians

Health care reform has been the subject of heated debate in Washington D.C. for nearly a year.  It is a complex issue that will have a profound impact on our lives, our children’s lives, and our grandchildren’s lives.

Most people agree that the increasing costs of health care and health insurance can create a hardship for individuals, businesses, and government. There are strong opinions on the best way to address the problem and there is no way to know in advance who is right.  But the deadlock in Congress has created an immediate crisis.

Medicare payments to physicians are based on a complex set of rules and formulas. One of the formulas is known as the sustained growth rate It was put in place in 1997 as a way to control Medicare Part B costs. At the end of each year, the actual Part B expenditures are compared to budget targets. If actual expenditures exceed the target, payments to providers in the following year are supposed to be reduced.

Basically, the SGR penalizes physicians for poor government estimations of things like life expectancy, demands for service, increased benefits, and advances in medicine.

For the past decade, the SGR formula has mandated that physician payments be reduced to make up for the unexpectedly high demand for services by seniors. Each year Congress has stepped in at the last moment to forestall the cuts. Each year since 2002, I have received letters and e-mails from our Colorado representatives of both parties, promising that they were committed to enacting a long-term fix to what they agreed was a “flawed formula.” The fix has never come.

At the end of 2009, Congress again stepped in to prevent cuts in physician Medicare payments. This time, however, they only delayed the cuts for two months. On March 1,  physician payments from Medicare were cut by 21.2 percent. The following day, Congress passed legislation delaying the cuts until April 1, leaving physician offices in a state of limbo for yet another month.

It remains to be seen if they will reverse the trend of the past eight years and finally pass a permanent fix to the SGR.

The costs of running a medical practice have increased faster than inflation throughout the past decade. Yet, if the SGR formula is not fixed in a permanent way, the payment a physician receives to see a Medicare patient will be less than it was in the early 1990s.

Some practices, especially primary-care offices, will lose money seeing Medicare patients. Internal medicine and geriatric physicians may not be able to keep their doors open. Other offices may have to cut staff, reduce benefits or limit services. Some offices will raise the prices charged to insurance companies to offset the decrease in Medicare payments, ultimately resulting in higher premiums to those with commercial insurance.

The thing Congress has been ignoring throughout the health care reform debate is that access to medical care is dependent upon having enough qualified physicians willing to see patients. While many in Congress have pointed out that health care is less expensive in a number of other countries, they have not addressed the fact that many of those countries have forecast physician shortages in the upcoming years due to inadequate payments to doctors.

In the short term, the pending cuts in Medicare reimbursement are likely to make it more difficult for seniors to find a physician.  Several practices will limit the number of appointments available for Medicare patients. Some practices will opt out of Medicare entirely.

In the long term, it is likely that fewer bright young men and women will choose medicine as a career. The uncertainty surrounding the future of medicine makes it very difficult to justify the medical school tuition and the number of years of study sacrificed to become a physician.

Physician shortages in the future are almost certain unless health care reform includes incentives to entice our best and brightest youngsters into the field of medicine.

Health care plays a big role in the Mesa County economy. Thousands of people are employed in the medical sector and they are rightly worried about the stability of their jobs.

In times of high uncertainty, physician employers are afraid to hire more people, employ contractors to build new offices or purchase state-of-the-art medical equipment. They cut back on purchases of office supplies. Charitable donations to important community events and organizations decrease. The failure of Congress to act has a ripple effect that adds to the financial hardships now facing the Western Slope.

We urge readers to add their voices to those asking Congress to fix the broken SGR formula. Even if it does not affect you today, it will impact you in the future.  Please contact your congressional representatives to express your concerns about this situation. Find them at where you can easily identify your representatives by inserting your zip code in the “Get Involved” locator box.

We hope that Congress acts in a reasonable and responsible manner to ensure that you and your family can continue to have access to high-quality health care. It is not enough to put another short-term fix on the SGR formula. It needs to be fixed in a fair and permanent way.

Dale A. Reigle, is CEO of Rocky Mountain Orthopaedic Associates in Grand Junction.


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