21% Pay Cut May Force Physicians To Stop Seeing Medicare Patients

It's a threat made many times before. Large numbers of doctors will stop accepting new Medicare patients, and may scale back their existing Medicare patient roster, if a 21% Medicare pay cut goes through as scheduled in January.

This time more than ever, physicians say they're serious.

"Access to care and choice of physician for seniors, baby boomers and military families is at serious risk and Congress must fix the payment formula once and for all this year," says J. James Rohack, MD, president of the American Medical Association.

The 21.2% cut is "the largest payment cut since Congress adopted the fatally flawed Medicare physician payment formula," he says.

A remedy is on the way with H.R. 3961, legislation introduced Thursday in the House Ways and Means Committee. It would stop the 2010 payment cut from going through, at an estimated cost of $239 billion.

It would also "replace the physician payment formula (known as the Sustained Growth Rate or SGR) with a more stable system that ends the unrealistic cycle of threats of ever-larger fee cuts followed by short-term patches," according to a Ways and Means statement issued Thursday.

The new formula would:

• Remove items such as drugs and laboratory services not paid directly to practitioners from spending targets in Medicare Part B (physician services).
• Allow the volume of most services to grow at the rate of the gross domestic product plus 1 percentage point per year.
• Allow the volume of primary and preventive care services to grow at gross domestic product plus 2% per year.
• Encourage coordinated innovative care through Accountable Care Organizations, which would be responsible for their own growth paths, without regard to reductions or increases that apply elsewhere in the system.

Ted Mazer, MD, a California ear, nose and throat specialist, confirms that doctors will find it difficult to continue seeing Medicare patients, especially taking on new patients. Additionally, all other physician reimbursement from government funds tied to Medicare, such as those paid by CHAMPUS for military dependents, is affected as well.

Already, he says, many physicians are saying goodbye to Medicare and going to "concierge-only" practices, where they accept an annual fee or retainer with a promise of providing enhanced care.

Mazer says the key problem is how the formula treats the calculation for purchasing and administering intravenous drugs for cancer or renal failure patients in their office settings. "The way it is now, doctors who administer these therapies in their offices have to lay out the money to buy these costly drugs and they're not reimbursed that cost. Under the current formula, the cost of those drugs comes under physician services, under Medicare Part B," he says.