Medicare has been making sure our nation's seniors and disabled have access to healthcare coverage for the past 40 years-but what does the future hold? The most recent change-a much-needed prescription-drug benefit-when fully implemented should ensure that America's seniors will not have to choose between paying for food and paying for the prescription medications they need. But while all eyes are focused on this latest important enhancement, there is a serious crack growing in the foundation of Medicare: the physicians who diagnose and treat our seniors-and prescribe those lifesaving drugs.
The 2005 Medicare trustees' report has projected sharp Medicare physician payment cuts of 26% over six years beginning in 2006, while at the same time the cost of running a practice and caring for patients continues to increase. Since 2002, physicians have received less than half of what the government says is the cost of providing care.
There is already a large gap between what Medicare pays physicians for healthcare and the cost of providing that care. Physicians are caught between the proverbial rock and a hard place. As they face cut after cut in Medicare payments, the cost of running a medical practice goes higher and higher. If these predicted cuts take place, physicians will be forced to think twice about taking Medicare patients into their practice. That news should send chills down the spines of seniors in Medicare-and it should be even more alarming for Americans who will be entering the Medicare program in the next few years.
In a recent American Medical Association survey, 38% of physicians said they would be forced to decrease the number of new Medicare patients they accept after the first payment cut takes place in 2006. Unfortunately, this would be just the tip of the iceberg, with the vast majority of the cuts yet to come.
A report by the Medicare Payment Advisory Commission issued earlier this year found that 22% of Medicare patients had trouble getting an appointment with a new primary-care physician in 2004, and 27% reported delays in getting an appointment. Sharp additional cuts in payments to physicians under Medicare are sure to make matters worse.
But make no mistake-physicians want to serve America's seniors. So when a physician says he or she is going to be forced to decrease the number of new Medicare patients in their practice, it is not a decision that is made lightly.
Other results of the AMA survey bring more bad news for patients. For example, after the first Medicare payment cut in January, 61% of physicians said they planned to defer purchases of new medical equipment and 54% planned to defer purchases of information technology. This is bad news because new medical equipment and information technology are critical for the kinds of quality improvement that the AMA, the federal government and America's patients are working for.
Many people express disbelief when they hear that doctor payments under Medicare are scheduled for cuts of 26% over the next six years. At the heart of the problem is the government's severely flawed Medicare physician-payment formula that defies logic and ignores economic reality. Medicare payments for physicians and other health professionals are tied to the U.S. gross domestic product. But the state of our economy-boom or bust-doesn't change our seniors' need for healthcare.
Under the current system, physicians are penalized with lower payments per service when the overall growth in the use of medical care under Medicare Part B exceeds GDP growth. In the real world, Americans are living longer than ever, more are entering Medicare and chronic disease continues to increase, which naturally leads to an increased need for Medicare physician services.
The government itself has encouraged the expansion of physician services under Medicare by speeding drug approvals for lifesaving medicines that require frequent physician visits for appropriate monitoring. The government has also encouraged more physician visits by adding or expanding Medicare coverage for more than 80 diagnostic tests and medical and surgical treatments since 1999. The government has also initiated campaigns urging increased use of important screening tests, such as mammography and colonoscopy. All of these government efforts to improve the health of America's seniors are laudable-and all lead to increased use of Medicare physician services. To penalize physicians with harsh payment cuts for providing these important services the government has encouraged simply does not make sense.
The ripple effect of these cuts is felt throughout the healthcare system. Emergency departments reported 113 million visits in 2003, the highest number ever. And the main driver behind that growth is seniors 65 and older. Robert Suter, president of the American College of Emergency Physicians, has rung the alarm bell, saying, "If Congress does not act to avert the cuts in Medicare this year, elderly patients will find it increasingly difficult to be treated by their physicians, and even more elderly patients will be coming to the emergency department for medical care."
MedPAC has recommended that Congress stop the payment cut in 2006 and instead increase Medicare physician payments to help keep up with medical inflation. In fact, the panel has recommended that the payment formula be scrapped and that Congress instead adopt the same approach for physician payment that is used for hospitals and nursing homes under Medicare-a system where payment updates would reflect practice-cost inflation. We could not agree more.
Recognizing the access crisis that is at hand, legislation was recently introduced in the House of Representatives to replace the planned payment cuts with a modest increase for 2006, and replace the broken formula with one based on practice costs. Legislation was also introduced in the Senate to replace the projected payment cuts for the next two years with a modest update based on practice costs.
The AMA is sensitive to the fiscal challenges facing policymakers and is very concerned about the long-term solvency of Medicare. However, we firmly believe that it is shortsighted and dangerous to allow an illogical, flawed Medicare physician-payment formula to threaten patient access to physician care. Congress must act now to stop the impending cuts and replace the flawed payment formula, which penalizes physicians with steep payment cuts for providing the necessary care for Medicare patients need.
Congressional action now to avert this crisis can shore up Medicare's foundation and retain the hallmark of the program-widespread access to physicians. America's seniors deserve no less.
J. Edward Hill is president of the American Medical Association.