Since Medicare was founded in 1965, advances in medical research, education and training have helped increase the average Americans life expectancy by eight years to age 78. Yet while the practice of medicine has evolved, Medicares payment system remains stuck in the past. We must improve the payment system in order to provide high-quality care to the baby boomers soon to be entering the program, ensure access to care for the senior and disabled patients who currently rely on the program, and help the nation get the most value for its healthcare dollars.
The American Medical Association is working to create solutions that keep physicians caring for Medicare patients and increase the value of medical care delivered.
One area that needs more focus is looming physician shortages. Primary care is in peril, and the government projects an overall shortage of 85,000 physicians by 2020. More than one-third of practicing physicians are over age 55. Shortages will affect many medical specialties, including family physicians, internists, geriatricians, cardiologists, oncologists and general surgeonsall specialties that an aging population will increasingly depend on for care. Improving Medicare payments will help make medical careers more attractive to the best and brightest students so that we can start to stem the tide of the shortage problem and prevent an exodus of practicing physicians.
On a more immediate note, Congress must once and for all replace Medicares payment-update formula, the sustainable growth rate. Physicians are only being reimbursed for two-thirds of the labor, supply and equipment costs that go into each service, according to CMS data. Without permanent reform by Congress next year, physicians will face a Medicare cut of 21% in 2010, and over seven years the cuts will total 40%. If Medicare physician payments do not begin to accurately reflect increasing medical practice costs, discussions on value will take a back seat to the urgent need to find physicians to care for Medicare patients.
Practicing in that type of doomsday scenario is the last thing physicians want for their patients. Congress and the new administration have to follow the first rule of leadership: When you are in a hole, stop digging. They can start by erasing the flawed baseline so we can start dealing in reality. Providing appropriate medical care to patients increases volume as patients live longer.
To help with reform, the AMA is analyzing specific proposals such as quality incentives, bundling payments and demonstration projects that test new payment models. We support rewards for care coordination and medical homes. Congress has already mandated Medicare to provide confidential feedback reports to physicians, which we believe could be helpful. The nation must also invest in comparative effectiveness research to ensure the promise of high-quality, cost-effective healthcare.
These proposals suggest that there is no quick-fix answer to the problemsome or all of the proposals may be used in a future payment model to get the most value from healthcare dollars.
Paying for care-coordination activities and implementing a medical-home model can reduce fragmentation and improve treatment for millions of Americans with multiple chronic illnesses. Applying evidence-based medicine through quality measures can also make a difference. To that end, the AMA-convened Physician Consortium for Performance Improvement has already developed 261 clinical measures, and measures on avoiding overuse are in development.
The AMA/Specialty Society Relative Value Scale Update Committee, also known as RUC, is also working to better value healthcare services in Medicare, and it recently gave the CMS recommendations on how services in its upcoming medical-home demonstration should be valued. The RUC has reviewed misvalued services and recommended lower payments for some that have high volume growth.
Its important to note though that per-beneficiary growth in physician services fell for the third year in a row to 3% in 2007, and the growth rate for imaging services has also slowed significantly.
As we work to ensure that evidence-based appropriate medical care is provided, health information technology can help eliminate waste and duplication in the system, but physicians must have the resources to invest in new technology. Health IT can be used to help medical practices participate in quality improvement initiatives and can provide more information at the point of care to help with clinical decisionmaking. But as we discuss the convergence of cost and quality, the fact that savings from health IT purchases accrue to third-party payers, not physicians, may deter doctors from these expensive purchases.
Greater parity between insurers and physicians is also needed if we aim to improve the system. Payments to Medicare private plans need to be more equitable. While this years Medicare legislation began to address the issue, more must be done by Congress to level the playing field between Medicare payments to insurers and to physicians. This year alone, private Medicare Advantage plans will be paid an average of $986 more per enrollee than traditional fee-for-service Medicare.
Congress and the new administration will have a full plate when they return to Washington in 2009, but its vital that Medicare reform stay on the agenda. Lawmakers are presented with a unique window of time to effect real change, and they must grab it. Physicians are eager to be a part of the solution, and through the AMA we will be working to create a sustainable Medicare for current and future generations of seniors.