LEGISLATIVE ADVOCACY
IMS JOB BANK The impending crisis in Medicare on July 1, 2008
Michael Kitchell, MD Ames, Iowa
There is an impending crisis in access to health care for over 500,000 Iowans who are covered by Medicare or Tricare (the coverage for veterans and their families). This crisis has been building over the last few years because of a Medicare payment formula for physicians called the sustainable growth rate (SGR), coupled with long standing geographic penalties to Iowa's hospitals and physicians.
The impending crisis in access is due to payment cuts for physicians that could result in many physicians either dropping out of Medicare, or restricting the number of Medicare or Tricare patients that they will see. Access to health care will become very difficult for our seniors and military veterans if these cuts in payment by Medicare and Tricare go through. Tricare's fees for physicians are tied to Medicare reimbursement rates, so for the rest of this discussion I will describe Medicare's cuts with the understanding that both Medicare and Tricare patients are affected by this impending crisis.
Many readers are aware of a recent report on the Medicare Trust Fund, which will run out of money by 2019. Unfortunately this Medicare crisis is not 11 years off, it is only 60 days away.
On July 1, 2008, unless Congress acts soon, Medicare payments to physicians will be cut 12.5% in Iowa. This 12.5% cut, plus scheduled cuts of 5% additionally every year until 2015, will add up to cuts of over 40% in physician payments from Medicare. In a recent nationwide survey by the American Medical Association, 60% of physicians said they will have to reduce the number of Medicare patients they see, or drop out of Medicare entirely if the July 1st cuts go through. There will be even more physicians who drop out of Medicare if the scheduled 5% cuts continue to reduce payments. So how did we get into this predicament?
In Iowa there is a shortage of physicians in many specialties and, in some areas, for primary care physicians. There is virtually no excess capacity to absorb those Medicare patients who after July 1st may lose their ability to see their doctor. The potential loss of access to health care is similar to the uninsured patients, who obviously have difficulty seeing a doctor unless they go to a free medical clinic or a hospital emergency department. Losing or reducing access to care for half a million Iowans, I believe is a major crisis.
Not all doctors will drop out of Medicare participation, but those of us who accept Medicare will find ourselves swamped with patients, and the waiting time to get in to see these physicians will increase. Iowa has the fourth highest percentage of over-65 year old people, yet we are 44th in the nation in number of doctors per population. The states that have fewer doctors per population than Iowa have a younger-aged population and younger people need fewer doctors. That combination of few physicians and many older people means that, on average, the physicians in Iowa have the most Medicare patients per doctor.
Some states, such as Massachusetts, have twice as many doctors per population as compared to Iowa. That, in my opinion, means that Iowa's physicians have to work harder than physicians in other states. Consequently, if Medicare cuts reduce the number of physicians accepting Medicare patients, the few who will see Medicare patients may be subject to burnout. Forty one percent of Iowa's physicians are over 50, and surveys show that at that age, many physicians consider reducing their patient care activities.
One of the reasons many physicians are reporting that they may have to drop out of Medicare is that the increasing cost to care for patients has not been matched by Medicare payments. Over the last 7 years, practice expenses for an average physician have increased about 20%, yet the average Medicare reimbursement fee has actually been about the same as in 2001. Insurance payment rates for some physician fees are currently 70-80% higher than Medicare payment rates in Iowa. For anesthesiologists, Medicare payment rates have been about 1/3 of the insurance rates.
Both hospitals and physicians know that cost-shifting from private insurance payments can only cover some, but not all, of what Medicare doesn't pay. Wellmark, the largest private insurer in Iowa, reports that they subsidize what Medicare doesn't pay and their premiums could be lower if Medicare would pay what they should pay to Iowa's hospitals and physicians. Many physicians who have a large Medicare burden feel that they can not afford to be cut 12.5% in July and another 5% every January, so they will cut back or drop out of Medicare.
A cut in Medicare payments of 12.5% in Iowa could set off a cascade of disasters. In the case of anesthesiologists, if some drop out of Medicare, this could result in a situation that surgery could not be done in a local hospital. Other hospitals and doctors might not have the capacity to absorb all the extra patients. Some physicians who don't drop out of Medicare might have to limit all patients as their work load increases, so even non- Medicare patients could see a reduction in access to their physician. So how did this crisis happen?
There are two major ways that our Iowa physician Medicare payments are cut. One is long standing geographic payment cuts, known as GPCIs (Geographic Practice Cost Indexes). These geographic cuts already set physician Medicare fees at 34% lower than California for example. This is one of the main reasons for physician shortages in Iowa. The GPCI cuts, which have been a major penalty for Iowa since 1992, will increase by 1.9% on July 1, 2008.
The second Medicare physician payment cut is not just for Iowa, but a nationwide cut triggered by the SGR formula as mentioned above. This SGR formula, passed by Congress over ten years ago, is the main cause of the nationwide crisis. The cut from the SGR is 10.6% nationwide. In Iowa, the 1.9% GPCI cut is added, for a total reduction in payments of 12.5% on July 1st.
As part of an Iowa Medical Society group, I participated in an AMA sponsored demonstration on April 2 on Capitol Hill in Washington DC to protest these impending Medicare cuts.
Congress and our president have admitted that this SGR formula is flawed, but since 2001, only temporary solutions have been instituted. Each year, at the last moment, the cuts have been deferred and only short term funding has been identified. Now, the SGR problem has magnified so that there will be a nationwide 10.6% cut in 60 days and another 5% cut every January 1st unless Congress and the president act to save access for Medicare and Tricare patients.
During the time I was in Washington, our Iowa Medical Society group was able to meet with Senators Grassley and Harkin, as well as Congressmen Latham, Boswell and Braley. Fortunately all our legislators say they are concerned about the SGR and geographic cuts to Iowa's physicians and have pledged to act before July 1st to avoid this impending Medicare crisis. Rather than a short term band-aid which Congress has chosen for the last few years, our physician payment system needs major reform. Will Congress again fund this problem only temporarily, and be faced with an even bigger crisis each year?
There are no easy answers to this problem, but the need for health care reform is great, and the time is short - 60 days and counting.