House, Senate block 10.6% cut for physicians

Washington, DC-An unexpected appearance by the ailing Sen. Ted Kennedy (D-MA) helped secure bipartisan passage of a "veto-proof" bill to block a 10.6% pay cut for 600,000 physicians who treat Medicare patients.

The bill, identical to a House version passed June 24, extends the 0.5% update through the end of 2008 and provides a 1.1% update to the conversion factor for 2009. It passed unanimously in the Senate July 9 after Democrats were able to garner enough votes (69 to 30) to bring the bill to the floor without fear of a filibuster, which was threatened by some Senate Republicans. President George W. Bush threatened to veto the bill, even though it was supported by 18 Senate Republicans, because it pays for the changes by reducing federal payments to the private Medicare Advantage plans he favors. If he vetos the bill, the bill would require support by two-thirds of the House and Senate to override the veto.

Although the measure gives physicians a positive update for the rest of 2008 and 2009, physician advocacy groups are wary because it does not fix the complex funding formula that prompted the pay cut in the first place. Under this bill, physicians would see a 21% reduction in Medicare payments unless the funding formula is changed before Dec. 31, 2009.

"It still isn't over yet," said Nancey K. McCann, director of government relations for the American Society of Cataract and Refractive Surgery (ASCRS).

Down to the wire

With the cut slated to begin July 1, representatives in the House voted 355 to 59 in late June in favor of the bill, called the "Medicare Improvements for Patients and Providers Act of 2008." Some senators were poised to act on the bill in time for the deadline and the scheduled July 4 break but were unable to secure enough votes.

Cathy G. Cohen, American Academy of Ophthalmology (AAO) vice president for governmental affairs, was outraged that legislators could not stop the pay cut.

"The AAO shares the anger and frustration of our members over a failed political process that allowed a Medicare cut to go in effect that nearly every elected official vowed to halt," Cohen said then. "We are hearing from physicians who now face difficult choices to deal with the nearly 11% cut. Congress must immediately enact legislation to preserve access for Medicare beneficiaries-the cut cannot be allowed to stand."

Although the cut took effect, the Centers for Medicare and Medicaid Services (CMS) agreed to hold claims for 10 business days with the expectation that legislators would pick up the issue when they returned from their holiday break. CMS planned to begin making payments under the 10.6% reduction on July 15.

Priscilla P. Arnold, MD, ASCRS government relations committee chairwoman, said the deep cuts in Medicare reimbursement force physicians to take measures to protect their livelihood.

"There are very few businesses that could withstand a sudden 10.6% reimbursement reduction, and medical practice is no exception," said Dr. Arnold, of Springfield, MO. "The reality is that such a reduction in payment may make many practices actually have to operate at a significant loss to care for Medicare patients. Physicians [would] have to make difficult decisions based on this reality, and that could certainly mean limiting Medicare patient volume, or withdrawing from the program altogether."

Physicians consider options

In a specialty such as ophthalmology, which treats a large number of elderly patients on Medicare, limiting patient volume is not an easy option. Yet, William L. Rich III, MD, FACS, medical director of health policy for the AAO, said that is what his practice in northern Virginia was ready to do.

"My own office was ready to send out letters to our patients saying we would no longer accept new Medicare patients," Dr. Rich said.

Eric D. Donnenfeld, MD, a refractive surgeon in New York and Connecticut and a professor of ophthalmology at New York University, said he was considering trimming some staff, delaying equipment upgrades, and stopping free surgery for patients who do not have the means to pay.

"In an era when patients have higher expectations and are increasing physician demands on time and access, it's difficult to accept reduction in reimbursement and continue to maintain the quality of care to the patients that they deserve," Dr. Donnenfeld said. "If we're expected to keep improving our quality of care and upgrade our equipment and have declining reimbursements, it's going to be difficult to maintain the high quality that we have had. We'll keep doing it, but it's going to be a challenge. A lot of doctors are going to reduce their access to health care."

Bill has drawbacks

Although the bill blocks the massive 10.6% pay cut, ASCRS did not endorse the measure because the organization opposed other portions of it-including phase-in of mandatory electronic prescribing and a plan to begin a value-based purchasing program, which McCann called "basically pay-for-performance: you would get paid based on your outcomes." The bill also requires that CMS would post on its Web site the names of physicians who participate in the Physician Quality Reporting Initiative, and it extends that program through 2010. "If [doctors] didn't participate, it doesn't mean they don't provide quality care," she said.

The AAO backed a bill proposed by Sen. Max Baucus (D-MT) because it included a 1.1% Medicare payment update for physicians in 2009. Meanwhile, Sen. Charles Grassley (R-IA) and Sen. John Sununu (R-NH) introduced a similar, competing bill that gave physicians 18 months of positive updates. Sens. Baucus and Grassley had tried to hammer out a compromise bill in June, but negotiations were unsuccessful.

In a September news conference, President Bush vowed to veto any legislation that takes money from the Medicare Advantage plans offered by private insurers, saying that such legislation would limit access.

"To build a future of quality health care, we must trust patients and doctors to make medical decisions and empower them with better information and better options," he said in his State of the Union address in January. "We share a common goal: making health care more affordable and accessible for all Americans. The best way to achieve that goal is by expanding consumer choice, not government control."

In an election year in which President Bush faces 23% approval ratings, however, Congress should "dare Mr. Bush to veto this bill," Dr. Rich said. "Frankly, if he does veto it, he's going to hurt the Republicans, who are already in big trouble, and build permanent enmity within the physician community for a decade to come."

As legislators work to forge a compromise, the medical specialty associations are equally divided on the best solution. McCann said she would like to see the associations agree on a plan they can recommend to legislators to fix the complex funding formula that leads to these annual battles.

"We all need to sit down in a room-all the specialties, the American Medical Association, everyone-and figure out what it is we want," she said. "We have to figure out what we can all agree to. You don't want to pit primary-care [physicians] against specialty care."

With such drastic cuts on the table of 10.6% this year and 21% next year, Dr. Rich said he expects legislators finally to do something to fix the problem. The payment cuts and income freezes have reached a level that cannot be ignored, he said.

"You just cannot afford to run an office with a 10% cut. This is a tipping point," Dr. Rich said. "These piddling [payment] freezes are devastating our ability to provide care. In the long term, we are going to see some more substantive health-care reform in the next 2 years, no matter who's president."

Even if legislators hammer out an acceptable bill, Dr. Rich predicted "weeks of chaos" as practices either hold their bills until the reimbursement is sorted out or submit the bills and file supplementary bills with CMS. "To change the programming on the world's largest health-care system is not going to be easy," he said.