Congress Faces Challenge With Future Medicare Physician Pay

Kerry Dooley Young

April 23, 2019

Current law would make Medicare a much less generous payer for physicians in future decades than private health insurers may be, newly released government reports show. That could put pressure on Congress to boost federal funding for care of senior citizens and people with disabilities.

In addition to sounding their much noted annual warning on the state of Medicare's hospital funds, the trustees and staff of the giant federal healthcare program on Monday emphasized an uncertain future for the current approach to physician payments.

In their annual report, the Medicare board of trustees cited 2026 as the year when the federal Hospital Insurance (HI) Trust Fund is likely to be depleted. This is the same date that the trustees gave in their 2018 report for this key source of Medicare's hospital payments to be exhausted, although the outlook is even worse this year.

By 2026, HI revenue would be sufficient to pay only 89% of the costs covered by the fund, the trustees said on Monday. In their 2018 report, they said the fund might cover 91% of these costs by then. Experts predict lawmakers will step in to prevent these cuts.

"Since seniors vote, before we get to this point, Congress almost certainly will enact some policy that will push the insolvency date out a few years," Joseph Antos, a researcher at the American Enterprise Institute, told Medscape Medical News in an email exchange.

"If history is a guide, we'll never actually hit a year when Part A is insolvent," said Antos, who earlier worked at the Congressional Budget Office and the White House's Office of Management and Budget. "Little fixes are possible, and of course, actuarial projections are only predictions."

The release of the annual trustees' report has for many years generated headlines about Medicare going broke. That description irritates experts in the finances of the federal program.

The hospital trust fund involves less than half of the Medicare program, not taking into account Part B, which covers physician services, or Part D, which covers pharmacy bills, said Charles Blahous, a researcher at the Mercatus Center at George Mason University, who is a former member of the board of trustees of Medicare and the Social Security Administration.

"The insolvency date is a minor part of the story and really shouldn't be the main focus of concern," Blahous told Medscape Medical News. "There are enormous financial strains above and beyond those which are captured in the insolvency date."

Payments "Not Achevable"?

Federal officials seem to agree with this view.

Routinely accompanying the trustees' report is an analysis by staff of the Centers for Medicare & Medicaid Services (CMS). Titled "Projected Medicare Expenditures Under an Illustrative Scenario With Alternative Payment Updates to Medicare Providers," this report delves into questions about how much the program might cost if Congress were to override its own previous efforts to control its spending.

The 2019 version of this CMS report notes that lawmakers will in the years ahead feel pressure to revisit recent laws that may curb growth in the program's spending.

The combined effects of the 2010 Affordable Care Act and the 2015 overhaul of physician pay, known as the Medicare Access and CHIP Reauthorization Act (MACRA), dictate "substantial, but very uncertain, cost reductions" for many services, CMS staff wrote in the 2019 version of this analysis.

Medicare payment levels could slip from equaling about 75% of private health insurance in 2017 to below 60% by 2030 and then drop close to 40% by 2050, according to a chart in the report. Medicare payment then might slide to 23% of private insurance rates by 2093, wrote John D. Shatto, director of the Medicare and Medicaid Cost Estimates Group, and M. Kent Clemens, an actuary, who authored the report.

Shatto and Clemens said there is a "strong likelihood that the scheduled physician payment updates and the productivity adjustments will not be achievable in the long range.

"It is reasonable to expect that Congress would find it necessary to legislatively override or otherwise modify the reductions in the future to ensure that Medicare beneficiaries continue to have access to health care services," they wrote.

If that happens, "actual Medicare expenditures are likely to exceed the projections shown in the 2019 Trustees Report for current law, possibly by considerable amounts," Shatto and Clemens added.

In their report, the trustees noted that Medicare expenditures were $741 billion in 2018 and were set to grow in future years at a faster pace than either workers' earnings in general or the economy overall.

Expressed as a percentage of the gross domestic product, Medicare expenses could increase from 3.7% in 2018 to 6.5% by 2093, as determined on the basis of a so-called intermediate set of assumptions, the trustees said.

But it could rise to 9.0% in 2093 if "the relatively low price increases for physicians and other health services under Medicare are not sustained and do not take full effect in the long range as assumed in the illustrative alternative projection," the trustees said.

In the view of the trustees, Medicare spending at this level thus would "substantially increase the strain" on taxpayers, the economy, and people enrolled in Medicare.

Time Left

Physician associations, such as the Medical Group Management Association (MGMA), will continue to monitor Congress for any sign of a change in approach to payment.

Anders Gilberg, MGMA's senior vice president of government affairs, said his organization is concerned that physician payments could prove "a political path of least resistance for Congress to find savings in Medicare."

But he also does not see lawmakers taking a serious look at Medicare finances.

"Despite these dire forecasts, there isn't an indication that Congress will address entitlement reform near term," he told Medscape Medical News in an email. "The current political debate is focused on expanding Medicare, not stabilizing its finances."

At this time, the supply of physicians available to provide care for the roughly 60 million people enrolled in Medicare appears adequate.

Congress relies on its Medicare Payment Advisory Commission (MedPAC) to keep tabs on how easily people enrolled in the program can find physicians. In March, MedPAC told Congress that its research indicated that 70% of people enrolled in Medicare reported they never had to wait longer than they wanted for routine care, and 79% reported having easy access to care of an illness or injury.

In fact, MedPAC research suggests that only 64% of those with private insurance were similarly satisfied with their access to routine care and that 74% of them were similarly satisfied with their access to care for illness or injury.

Congress thus seems unlikely to soon revisit the issue of Medicare pay for physicians to a significant extent, said Juliette Cubanski, PhD, MPP, MPH, associate director of the program on medicare policy at the nonprofit Kaiser Family Foundation. Lawmakers at this time are more engaged with other topics, such as reining in pharmaceutical prices.

"There are more immediate concerns that Congress is trying to act on right now," Cubankski told Medscape Medical News. "Taking on an issue like Medicare solvency or physician payment rates would probably be a more challenging topic for Congress to rally around and find bipartisan agreement," she said.

In their 2019 report, Medicare's board of trustees did offer a note of optimism about the program's fiscal outlook.

Projections of Medicare spending are "highly uncertain, especially when looking out more than several decades," owing in part to the possibility of major scientific advances, they said.

"Some conditions that are untreatable today will be handled routinely in the future," the Medicare trustees said. "While most health care technological advances to date have tended to increase expenditures, the health care landscape is shifting. No one knows whether future developments will, on balance, increase or decrease costs."

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