MedPac Mulls 'Doc Fix' With No Raises for 10 Years

September 16, 2011

September 16, 2011 — The Medicare Payment Advisory Commission (MedPac) is mulling a "doc fix" to the program's reimbursement crisis that would spread its enormous cost among beneficiaries and providers alike.

The proposed fix, which would ultimately require Congressional approval, translates into a 10-year freeze of Medicare pay for primary care physicians. Specialists would experience a 5.9% pay cut for 3 straight years, followed by 7 years of no change.

These austerity measures are part of a proposal prepared by MedPac staff, with the blessing of chairman Glenn Hackbarth, and presented to commission members yesterday. Similar to Congress and organized medicine, MedPac wants to avert a 29.5% reduction in Medicare rates on January 1 that is mandated by the program's sustainable growth rate formula for setting physician reimbursement.

This massive reduction is assumed in federal budget projections, so repealing the sustainable growth rate and freezing physician pay at 2011 levels would essentially put the government roughly $300 billion further in the hole. By shrinking specialist reimbursement for 3 years, the MedPac plan knocks down the cost of repeal to roughly $200 billion. Since Congress is in no mood for deficit spending, the MedPac proposal attempts to round up enough money to pay for its doc fix.

Accordingly, $235 billion in offsets would come from cuts to Medicare Part D drug plans (32%), post–acute care facilities (21%), hospitals (11%), laboratories (9%), suppliers of durable medical equipment (6%), Medicare Advantage plans (5%), and other providers (2%), with an additional 14% carved out of Medicare benefits to seniors.

MedPac is scheduled to vote on the plan for physician reimbursement, which will be fleshed out in more detail, when it meets again in early October. If approved, the plan then would be considered by Congress.

Initial Bad Reviews From Medical Societies

Organized medicine has warned that a 29.5% drop in Medicare rates would cause droves of physicians to leave the program, making it harder for seniors to receive medical care. However, the preliminary MedPac proposal for staving off this doomsday scenario did not endear itself to medical societies such as the American Medical Association.

"The misguided scheme discussed by MedPAC to replace the nearly 30% cut to physicians scheduled for January 1 with a new series of very significant cuts will harm patients and physicians in the Medicare program," American Medical Association President Peter Carmel, MD, said in a statement. "The new cuts are inconsistent with MedPAC's previous recommendations to stop cuts to physicians who care for Medicare patients because they threaten access to care for patients and would have severe consequences for the Medicare system."

Since 2001, Medicare reimbursement has failed to keep pace with the cost of running a medical practice, Dr. Carmel said. "Further drastic cuts pose a very real risk to physicians' ability to retain staff, care for Medicare patients and make the investments needed to modernize their practices and participate in care delivery models intended to improve quality while reducing costs in the Medicare system."

As a target of the annual cuts of 5.9% for 3 years running, the American College of Surgeons warned in a statement that the MedPac recommendations "do not value the role all physicians have in the continuum of care and would have a devastating impact on access to surgical care."

The American Osteopathic Association expressed solidarity with specialty societies such as the American College of Surgeons, as well as disappointment in the MedPac plan.

"We are troubled that in its proposal MedPac would divert so dramatically from its longtime position that all physicians participating in the Medicare program should receive annual increases in their payments," the AOA stated in a press release.

The association said it appreciates MedPac's commitment to promote primary care, especially through new delivery and payment models such as the medical home. However, the American Osteopathic Association opposes cutting specialist pay for the sake of bolstering primary care.

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