Physicians say they are optimistic that President Barack Obama’s upfront approach in his budget proposal to address the costs associated with fixing the Medicare physician payment formula will result in a permanent solution. But it’s anyone’s guess as to whether Congress will go along with the proposal or how Congress will deal with it given the legislative body’s history of dealing with the formula.
Addressing the costs of Medicare reimbursement to doctors is part of Obama’s “honest” approach to the fiscal challenges the country faces, Peter Orszag, director of the White House Office of Management and Budget, testified before the House Budget Committee earlier this month. Obama’s fiscal 2010 budget blueprint includes the likely future costs associated with the wars in Iraq and Afghanistan and fixing the alternative minimum tax, Orszag stated. “This honesty comes at a cost—$2.7 trillion or more over 10 years on our bottom line.”
That price tag also includes nearly $400 billion to stave off planned Medicare payment cuts through 2019, Orszag said. Congress over the years has approved temporary measures to delay cuts to doctors, yet physicians in 2010 face a 21% cut to their payments unless Congress intervenes again. The catalyst behind these payment reductions is Medicare’s sustainable growth-rate formula, or SGR, which is used to determine physician payments and is tied to growth in the economy.
According to Orszag, this provision in Obama’s budget blueprint makes the realistic assumption that Congress will continue to take actions to avert deep payment cuts through 2019. “As a result, projected deficits are about $400 billion higher over the next 10 years than they otherwise would be. In contrast, past budgets accounted for no SGR relief in any years,” Orszag said.
Lori Heim, M.D., a family physician at 102-bed Scotland Memorial Hospital, Laurinburg, N.C., and president-elect of the American Academy of Family Physicians, believes Obama’s approach “will actually help Congress” achieve reform on the SGR. “We don’t want another Band-Aid,” she says of the mostly one-year solutions Congress has been coming up with over the past five years. “This is not the way to manage a significant issue like the SGR.”
Orszag said this 10-year relief package should not necessarily be the ultimate solution. “We need to move toward a system in which doctors face stronger incentives for providing high-quality care than simply more care,” he said.
The GOP’s budget caucus warns that the physician payment provision would add to deficit spending. Rep. Paul Ryan (R-Wis.), the House Budget Committee’s ranking member “believes the current Medicare physician payment formula is outdated and should be fixed,” says Angela Kuck, GOP spokeswoman for the budget panel. “He does not, however, support including the physician payment update in the baseline” as it circumvents “paygo” compliance, she says.
The hope is that linking physician payment reform to quality or doing other cost-saving measures such as establishing medical homes will result in some savings that could offset that $400 billion in costs, says Robert Doherty, senior vice president of governmental affairs and public policy with the American College of Physicians.
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