Medicare physician payment is one of healthcare's thorniest issues. One could argue with equal vigor that doctors deserve a significant pay cut because so many of them seem to be gaming the system or that Congress should increase reimbursement to keep good doctors caring for the elderly.
Faced with a stunning 15% increase in Medicare Part B spending last year, the administration and Congress seem less likely to back off from a scheduled 4.3% cut in physician reimbursement in fiscal 2006. Even freezing current rates would cost $110 billion over 10 years, according to a government report. This comes at a time when future entitlement spending and federal budget deficits are under intense scrutiny.
A new survey by the American Medical Association finds that one in 10 responding docs say they would simply retire next year if the reimbursement cut takes place, while another 38% say they would accept fewer Medicare patients. If payment reductions of 26% take place in the next six years as envisioned under current law, medical groups say they would be forced to cut staff and stop investing in things like information technology. Quality of care might suffer, not to mention efforts to reinvent the healthcare delivery system.
Knowing organized medicine, there is no doubt that some serious smoke is being blown here, but the dilemma is very real. Managed-care rates are loosely linked to Medicare's fee structure, so any federal cuts are magnified. The AMA's lobbying campaign, unveiled last week, will include elderly patients beseeching legislators to preserve access to care. Beneficiaries' Part B premiums may rise to $89 per month next year. Together with last year's premium increase, that amounts to a 34% increase in just two years. With so many retirees on fixed incomes, that hurts.
Before our heartstrings are tugged completely in one direction, however, a look at CMS data is in order. That 15% increase in utilization, coming at a time when private health-spending increases have eased to about half that rate, is a giant neon warning sign. The biggest contributor to the Part B surge-about 29%-was billing for more and longer office visits. No doubt some of that is attributable to noble efforts to manage chronic conditions, but several other numbers fairly leap off of the CMS charts as evidence of overuse of services.
Imaging procedures shot up, accounting for 18% of the overall spending growth; MRI costs alone went up by 25%. Charges for one type of injectable drug increased by 635% (that's not a typo), while the number of such procedures leaped by 43%. One form of chemotherapy resulted in a 409% surge in charges and a 25% spike in procedures.
As a result of such numbers, both the CMS and Senate Finance Committee Chairman Chuck Grassley (R-Iowa) plan to study what's behind the Part B spending surge. The Medicare Payment Advisory Commission has also renewed its push for developing new measures for quality and efficiency of care by individual physicians and medical groups. Both are necessary activities.
Previous research has found no relationship between higher spending and better care. A study published in the journal Health Affairs last year found there is an inverse relationship between health spending and quality.
It seems that unless lawmakers are willing to cut other provider payments to pay doctors more, the 4.3% reduction will come to pass. Doctors will either absorb this loss or leave medicine, with some negative consequences for patients but probably not as many as the AMA predicts. Many doctors will work harder to gin up the number and intensity of services they provide to keep their incomes stable.
This situation leaves me wondering about those in organized medicine and academia who scoff at the idea of pay for performance. It may not be a perfect idea, but what are the alternatives?