Dr. Ron Davis, AMA President

Physicians are slated to take a 10.1 percent Medicare rate cut this year, and the heads of two of healthcare’s powerful advocacy groups — the American Medical Association (AMA) and the Medical Group Management Association (MGMA) — say the payment slash is bad news for more than doctors. It’s bad news for America’s seniors. “They (physicians) are getting to the point where they’re having a hard time making ends meet. Consequently, many doctors are cutting back on their Medicare patients and will cut back even more or will abandon the Medicare program if the cuts go through in 2008 and beyond,” said AMA president Dr. Ron Davis, adding that projections indicate cuts of about 5 percent annually for 2009 through 2015.

Calling the situation “a looming crisis,” Davis said, “I should hasten to add that doctors want to take care of seniors. Elderly people typically have many chronic illnesses such as high blood pressure or arthritis or diabetes, and they need help. But with these Medicare cuts in physician payment, it’s becoming increasingly difficult to make their payroll and keep their office open.” Dr. William F. Jessee, MGMA president and CEO, said the 2008 Medicare payments are “slightly lower than they were in 1999,” while physicians and physician groups face increases in operating expenses. In fact, the cost of operating a practice has gone up about 65 percent from 1999 to 2008, he said. “It starts making it a little tough to keep the doors open, and it winds up shifting more costs to private payers as well,” he said. The 10.1 percent cut is an average, and Jessee noted that procedure-oriented specialties are taking a bigger hit than primary-care specialties — and imaging services are taking the biggest hit of all. Davis said AMA is pushing in Congress for a “positive physician update” of 2 to 3 percent in the short-term. “Long-term, the government needs to scrap this flawed formula that is resulting in these cuts,” he said. AARP has joined AMA in an education campaign to explain how the Medicare physician cuts potentially influence healthcare costs and access.

Rising Operating Costs

Medicare’s lower payments come at a time when physicians face other financial pressures. Examples include the need to invest in electronic health records and rising premiums for medical liability insurance. Davis said AMA continues its campaign to rein in malpractice premiums by pushing for a $250,000 cap on pain-and-suffering awards. “We have some states and communities where medical liability insurance carriers have dropped out of the market, and it’s hard to find a carrier to provide insurance for some doctors,” he said, adding that the pressures are “particularly severe” for high-risk specialties such as obstetrics, emergency and trauma medicine, and neurosurgery. Speaking realistically, Davis said, “We’re not going to get meaningful medical liability reform out of this Congress, but we continue to focus on achieving meaningful reform at the state level.” Jessee noted another looming issue that will hit all physician practices eventually — the transition from the ninth to the tenth revision of the International Classification of Disease. A majority of nations moved to ICD-10 in 2000, while the United States still uses ICD-9. He said that during the last session of Congress, “there was a lot of steam behind” the rapid move to ICD-10, but one of the primary proponents, Nancy Lee Johnson (R.-Conn.), was defeated in 2006. “Our policy is that if and when the transition is made, there needs to be an adequate lead time. It can’t just be another unfunded mandate that gets dumped on top of the practices,” Jessee said, adding that adoption of ICD-10 will be “as chaotic for practices as HIPAA was, if not worse, simply because of the complexity of the coding system.”

Quality and Pay for Performance

When it comes to Medicare, Jessee called the agency’s pay-for-performance initiative “pay for reporting” instead. He said MGMA members who have participated have almost unanimously said that it costs more to participate than they stand to recover in terms of the 1.5 percent bonus payment. He criticized Medicare’s decision to include the quality data on the claims form. “We think it’s a mistake to mix claims payments with quality-measurement reporting because you wind up not doing a very good job of either,” he said. Davis touted the new Physician Consortium for Performance Improvement as the answer to improving quality and safety while measuring performance. Convened and staffed by AMA, the consortium of more than 100 different medical associations has already developed performance measures for several conditions, including diabetes and asthma. “The wonderful part about this initiative is that it involves doctors developing performance measures for physicians based on the evidence,” he said.

Healthcare Pricing

On the surface, it sounds like a good idea — tell physicians to post their retail price for each service or procedure. Yet Jessee said MGMA is “being sort of loud” in opposition to such proposals on Capitol Hill. “The problem is that a physician’s retail price has nothing to do with anything because that’s not what anybody pays,” he said. Patients want to know the out-of-pocket cost, which is tied to insurance payments. “Our feeling is that they’re barking up the wrong tree in looking for transparency,” Jessee said. “It ought to be the insurers that are required to disclose to their insureds how much they will pay for a service and how much the patient’s share is going to be.”

Health Insurance and Public Health

AMA will spend much of 2008 advocating for improved insurance coverage and improved public health, Davis said. The association supports the children’s health insurance program “at a funding level where all eligible children will be enrolled — about 9 or 10 million of them,” he said. AMA also is pushing a proposal to insure all Americans — a plan that offers tax credits so individuals buy their own insurance. The AMA proposal also gives consumers choice and introduces market reforms, he said. The AMA is in the midst of a three-year campaign to force health insurance as an issue in this presidential election cycle. The AMA public-health agenda includes reducing or eliminating health disparities, disaster preparedness and promoting healthy lifestyles. “Particularly worrisome is that the rates of obesity are getting worse and they’re involving children and adolescents more and more,” Davis said. “Estimates are that this generation will be the first generation in many generations to have a lower life expectancy than the previous generation.”

Nursing Shortage Continues to Trouble ANA

When it comes to the top 2008 agenda item for America’s nurses, it’s the same one as previous years: There aren’t enough nurses, and the nation isn’t doing enough to cure that ill. “Just about everything that you can think of that has to do with healthcare involves a nurse, and we’re already seeing the impact of this shortage on patient care, military readiness, pandemic flu and bioterrorism preparedness, and public health. And it is projected to get much worse,” cautioned Erin McKeon, associate director of government affairs for the American Nurses Association (ANA), pointing out that by 2020, the nation will be short 1 million nurses. One of the “disturbing things” about this shortage, McKeon continued, is that people interested in entering the field are hitting education barriers. During the 1990s, enrollments in nursing schools were down, but today interest is soaring. Unfortunately, schools are full and “turning away hundreds of thousands of students per year for lack of capacity to teach them,” she said. ANA has launched a “multi-pronged approach” to help rectify the problems, McKeon said. “What that comes down to largely – and unfortunately – is money,” she explained. The Bush administration has slashed funding for Title 8 of the Public Health Service Act, which includes funds to boost nursing education. The current legislation initially included an $18 million increase, yet the administration proposed to cut $44 million. That’s a primary battleground for ANA, she said. The association also has a bone to pick with hospitals. McKeon pointed to hospital understaffing as one reason why half a million registered nurses with active licenses no longer work in nursing. Another problem is mandatory overtime, she added. In addition, McKeon said ANA is working to make reporting of nurse staffing levels a hospital quality measure.

UPDATE, DEC. 27 2008: Physicians Beat Back Medicare Reimbursement Cut – For Now American doctors gained some much-needed breathing room when Congress passed legislation on Dec. 19 that replaced a scheduled 10.1 percent cut in 2008 Medicare physician payments with a 0.5 percent increase. Health and Human Services Secretary Mike Leavitt said that President Bush is expected to sign the measure. However, the increase is only in effect through June 30, and if Congress takes no other action by then, physicians will face a cut of approximately 10.6 percent. Dr. Edward Langston, chairman of the board of the American Medical Association, decried the move as “extremely disappointing,” considering the temporary fix “creates uncertainty for both Medicare patients and physicians. We strongly urge Congress to break the tradition of short-term interventions that are not funded and fail to chart a course for replacing a flawed payment formula that is a barrier to improving quality and access to care for seniors.” The AMA led a $3 million grassroots campaign to avert the scheduled cut, and Congress increased spending for Medicare physician payments by $3.1 billion.

The AMA had asked Congress – at a minimum – to provide a two-year payment update. The legislation also: • Authorizes an additional 1.5 percent bonus for the Medicare physician quality reporting initiative through Dec. 31, 2008. • Extends the physician scarcity bonus through June 30.

• Removes $1.5 billion from the Medicare Advantage stabilization fund.

• Eliminates the physician payment fund carried over from the 2006 Medicare package.

• Reduce payments for some Part B drugs. • Extends therapy cap exceptions.

• Extends SCHIP funding through March 31, 2009 (additional funding for current enrollment).

The AMA blamed Washington’s “hyper-partisan environment” for gridlock on several fronts, including Medicare, SCHIP, tax policy and health system reform. The organization also pointed a finger at a threatened Bush administration veto of a Medicare package that reduced Advantage payments. The AMA in December declared sound Medicare physician payment its No. 1 priority for the next six months. The Medicare Participation decision period is open until Feb. 15.

January 2008

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