Medicare physician pay cut takes effect Dec. 1 unless Congress intervenes

The 23% reduction would hurt many practices and may force some to consider opting out of Medicare, ophthalmology advocate says.

Physicians are scheduled to take a 23% cut in Medicare payments Dec. 1 unless Congress takes corrective action to stall the reduction. The cut will increase to 30% after January 2011.

The payment cut stems from the sustainable growth rate (SGR), a key factor in the annual Medicare payment formula. Under the SGR, physicians have faced a series of negative payment updates for several years, causing practice instability and temporary disruptions of cash flow.

Short-term fix

A short-term fix would increase anxiety among many physicians, Catherine Cohen, American Academy of Ophthalmology vice president for governmental affairs, said in an interview with Ocular Surgery News.

“There is a high probability of another short-term, 3-month fix, which is not acceptable,” Ms. Cohen said. “You are going to see more physicians and ophthalmologists, many of them for the first time, sitting down with their business managers, trying to figure out if they can afford to go nonparticipating in 2011.”

Unless there are permanent changes to the SGR or it is eliminated, physicians will call for measures such as “private contracting” that enable them to continue accepting Medicare patients, Ms. Cohen said.

“What we’re demanding is more options,” she said. “[Opting out of Medicare] is really not an option for ophthalmologists. At a minimum, we need some modification of the current options to make them more real.”

If Congress intervenes to stall the payment cut, it would likely pass a short-term fix because of cost restraints, Brock K. Bakewell, MD, FACS, chairman of the American Society of Cataract and Refractive Surgery’s Government Relations Committee, said.

“I don’t think we are going to see a permanent fix, because the cost of a permanent fix is very expensive … up to $300 billion,” Dr. Bakewell said. “In a recession economy, I just don’t think we are going to see that kind of money appropriated by Congress to fix the SGR.”

The outcome of the November midterm elections will also affect the resolution of the payment cut, Ms. Cohen and Dr. Bakewell said.

A 21% payment cut took effect June 1, but Congress later reversed and delayed it retroactively.

Limiting charge and modifier

“I think that Congress is going to have to change the whole Medicare payment structure,” Dr. Bakewell said.

The ASCRS Executive Committee has taken the position that if physician payments are cut further, the limiting charge for services provided to Medicare patients should remain unchanged or possibly be raised to reflect the true cost of practicing medicine, he said.

“Medicare participating physicians are paid according to an allowable charge,” Dr. Bakewell said. “A limiting charge would be something that a nonparticipating physician could charge.”

Even if the allowable charge is reduced, the higher limiting charge would help physicians meet the costs of running their practices, he said. However, that would force patients to bear a higher share of costs.

“You would have more physicians who would become nonparticipating, and these doctors would charge the limiting charge,” Dr. Bakewell said. “There is going to be more shared patient responsibility. We cannot keep having these draconian cuts that do not reflect the true cost of practicing medicine. You cannot fix the Medicare system on the backs of physicians. Congress cannot do that. It won’t be viable.”

The payment cut is unfair because physician fees account for only about 16% of the Medicare budget, Dr. Bakewell said.

“Government likes to target physicians … but we are not responsible for the bulk of the Medicare budget,” he said. “Doctors are continually blamed for the increased costs. … Yes, we are part of the problem because we order tests, but there are other issues. We spend money because we practice defensive medicine. We need tort reform if we are going to stop ordering as many tests.”

As far as upcoming Medicare payment changes, the Patient Protection and Affordable Care Act of 2010, passed in March, creates a value-based modifier that would be applied to each Medicare code beginning in 2015, Ms. Cohen said. However, what the value determinant will be to differentiate physicians has not been decided.

“That does not really affect the SGR,” she said. “Whatever the SGR is going to pay you, a value-based modifier applied to each code would adjust your payment starting in 2015, and higher-‘value’ physicians will be paid more.” – by Matt Hasson

• Brock K. Bakewell, MD, can be reached at 5599 N. Oracle Road, Tucson, AZ 85704-3821; 520-293-6470; e-mail: eyemanaz@aol.com.
• Catherine Cohen can be reached at American Academy of Ophthalmology, Governmental Affairs Division, 1101 Vermont Ave. NW, Suite 700, Washington, DC 20005; 202-737-6662; fax: 202-737-7061; e-mail: cgcohen@aaodc.org.