The American Geriatrics Society - Policy - Physician Reimbursement Medicare Update

Physician Reimbursement - Medicare Update

What is the key issue concerning Medicare physician reimbursement?
What is the status of plans and proposals regarding Medicare physician reimbursement?
Why is this issue important?
What is the Society's position on physician reimbursement?

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What is the key issue concerning Medicare physician reimbursement?

Medicare’s contentious Sustainable Growth Rate (SGR) formula mandates cuts in physician payment rates when growth in outlays for physicians’ services exceeds growth in Gross Domestic Product.
In July 2008, both houses of Congress voted to override a presidential veto of legislation blocking the 10.6% that was scheduled to take effect July 1.
The legislation, the Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331), replaced the 10.6% cut with a 0.5% update for the remainder of 2008. For 2009, an anticipated 5.4% cut has been replaced by a 1.1% payment update.
However, this legislation does not eliminate or reform the sustainable growth rate (SGR) system. The SGR is projected to mandate Medicare payments cuts totaling roughly 40% over the next nine years – during which practice costs are expected to increase 20%.
In previous years, Congress has blocked the SGR-mandated cuts -- in the wake of concerted advocacy efforts by the American Geriatrics Society, its members and other advocates of quality healthcare for older Americans.

What is the status of plans and proposals regarding Medicare physician reimbursement?

The 110th Congress’ Medicare Improvement for Patients and Providers Act provided an 18-month reprieve, which will give Congress until the end of 2009 to work with provider groups on a long-term solution to the current flawed payment system.
Senator Baucus, Senate Finance Chair, has indicated that SGR reform will be a top priority in the 111th Congress. He personally supports initiatives that would increase the number of primary care healthcare professionals. The House Ways and Means Committee has also demonstrated renewed interest in pursuing SGR reform. Congressional staff is exploring whether to revise the SGR or to replace it with a system of separate conversion factors. One possible alternative is the use of six different service categories as proposed by the House-passed CHAMP bill:
- primary care and preventive services;
- other evaluation and management (E&M) services;
- imaging services and diagnostic tests (other than clinical diagnostic laboratory tests);
- major procedures;
- anesthesia services; and
- minor procedures/other physician services.

Why is this issue important?

A Medical Group Management Association (MGMA) survey released in March 2008 found that nearly half of the more than 1,000 practices responding reported that a 10.6% cut in Medicare physician payments scheduled to take effect July 1 has led them to stop accepting or limit the number of beneficiaries they accept. Half of the practices said they were considering reducing administrative and clinical staff and more than two-thirds indicated they would forgo or postpone investments in health information technology.
The payment cuts would likely have both immediate and long-term effects on access to appropriate elder healthcare. Below-market reimbursement is a leading disincentive to entering or remaining in the fields of geriatric medicine, internal, and family medicine. Further cuts in payments are likely to discourage promising candidates from pursuing careers in geriatrics and may also exacerbate the loss of practicing geriatricians, internists, and family physicians. They could also discourage academic geriatricians from remaining in the field, further threatening the future supply of geriatrics health professionals.

What is the Society’s position on physician reimbursement?
AGS recommends changes in Medicare, Medicaid and private payer reimbursement that ensure that older adults receive the care they need and all healthcare professionals are adequately compensated for the care they provide. Provider reimbursement should take into account differences in the complexity of patients' healthcare needs. Among other things, services such as geriatric assessment and care coordination should be covered when integral to appropriate care. The extent to which the care of an individual patient is more or less time-consuming should be taken into account in determining reimbursement. We believe the goal should be the transformation of the delivery and payment systems to support high quality patient centered care for older adults, particularly those with complex and chronic conditions.

We are concerned that continued increases in physicians' practice expenses, could force a growing number of doctors to see fewer Medicare beneficiaries or stop seeing Medicare beneficiaries altogether. Clearly, the SGR formula has proven to be neither sustainable for physicians nor beneficial for older Americans. Physician payment updates should be based on annual increases in practice costs. AGS strongly supports reforms in the physician fee schedule system that will ensure elderly patients access to quality healthcare.