Physicians Face 21% Medicare Rate Cut in 2010
[Posted 05/04/09]

At the beginning of 2009, it appeared as though the annual kabuki theater of threatened Medicare cuts might not materialize this year. The Obama Administration became the first presidential administration to release a budget that would eliminate the SGR, at a cost of $380 billion. Also, the House Budget Committee agreed in March to waive congressional pay-as-you-go rules (which require new federal spending to be offset by budgetary cuts or tax hikes) for the SGR, further clearing the path towards a permanent Medicare fix.

However, the House recently reversed itself, and voted to uphold the pay-as-you-go rules for all programs, effectively requiring an additional $285 billion. Therefore, Congressional leaders may scale back their plans to completely eliminate the SGR and only reverse the cuts for a few years at a time. If no changes are made, physicians face a 21 percent cut in Medicare rates in 2010.

The Senate Finance Committee released a paper this week on Medicare payment reform. It is the first of three papers they will be releasing this month on health reform. In brief, because of the enormous cost to eliminate the SGR ($380 billion), the finance committee plan stops the SGR cuts for three years and gives physicians a 1 percent payment increase in the first two years. Physicians who provide 60 percent of their services in ambulatory settings would receive 5 percent bonus payments for five years for E&M services for new and established patients. General surgeons practicing in designated rural areas would also receive 5 percent bonus payments. These bonuses would be paid for by reducing payments across the board for all other services. While there are numerous initiatives in the proposal, the major one is the proposed establishment of a shared savings program whereby physicians who affiliate and form coordinated care organizations may receive bonus payments based on the savings achieved in the Medicare program (Part A and Part B) in their area.

While CMA appreciates the commitment the Senate is making to pay for the gradual elimination of the SGR without imposing larger cuts in future years, the proposed 1 percent payment increase and the net reductions in other services are completely inadequate to cover rising physician practice costs. CMA is supportive of the substantial increases for E&M services, however CMA strongly opposes cuts to other services to pay for those gains. CMA will be meeting with the Senate Finance Committee in Washington, D.C., next week to discuss this proposal.

With Medicare reform discussions in Congress providing the backdrop, CMA’s Board of Trustees recently adopted new policy dealing with the issue at its April meeting. The new policy is designed to reflect different modes of practice and to ensure that doctors have a choice in determining how and whether they participate in Medicare, and should they do so, receive a fair compensation for their work.

The highlights:

• CMA will continue to support the elimination of the SGR payment formula;
• CMA will urge Congress to provide a Medicare payment update of at least 10 percent in 2010 as a catch-up for the last 7 years of inadequate updates;
• CMA will support a new Medicare physician payment system that allows physicians to voluntarily select a payment track based on five options that reflect their mode of practice. The five options include a solo/small group physician track that pays physicians based on the Medicare Economic Index, a medical home track, and a track that allows physicians to organize into virtual or real groups to coordinate care and receive bonus payments based on the hospital savings they achieve in their region. The plan also allows physicians to privately contract with Medicare patients for certain services.
• CMA will advocate for physicians to be granted anti-trust relief to collectively negotiate contract terms with the private health plans.

A summary of the board-approved policy is available in the summary minutes from the most recent CMA Board of Trustees meeting (dated April 23, 2009).

Contact: Elizabeth McNeil, 415/882-3376 or emcneil@cmanet.org.