What Do We Need to Do to Fix the Medicare Physician Payment Problem?

Whenever the subject of Medicare physician fee payments comes up on this blog, the reaction from physicians, particularly primary care docs, is predictable: "You can't cut us, we haven't had a Medicare raise in years, we are already dramatically underpaid, and if Medicare cuts our payments we are going to stop taking Medicare patients."

There is no doubt that doctors have a point--particularly the primary care folks. A huge problem is that the payment balance between primary care and specialty care has gotten way out of whack as both private and public payers have tended to lump the two categories of physicians together. This has been going on for so long that it is also leading to a growing shortage of primary care physicians.

There is also no doubt that Medicare is financially unsustainable on its present track and that applies to all categories of health plans--public and private.

The Sustainable Growth Rate (SGR) formula is obviously not working--just the fact that the Congress keeps overriding it speaks for itself. But in concept, it did have a legitimate objective.

Congress created the SGR in 1997 as it became clear Medicare costs could not be sustained. The idea was to set an "affordable" physician cost trend and when real costs exceeded that level Medicare would compensate for it by cutting future fees.

The SGR message to doctors was simple: If you spend too much the Medicare program will compensate by cutting your fees in the future to balance things out. The objective was to give physicians a reason to control their costs.

As we now know, the Congress did a "never mind" every time a cut was required under the formula.

Maybe the SGR was too broadly targeted. Maybe the target should haven been broken down with a focus on primary versus specialty, or even by each specialty. Maybe it was an unrealistic idea in the first place. Maybe the fact that it was never enforced spoiled its intent. Maybe it was unrealistic to think the docs really had any control in the first place. Maybe we should just give the docs a blank check.

What is happening to Medicare and physicians also can't be seen in a narrow context--the same issues plague Medicaid, SCHIP, and the commercial market. Costs for hospitals, drugs, durable medical equipment, and everything else is also on the same unsustainable track.

But to all the physicians who post on this blog with the general message "you can't cut us," there may be a lot of truth to that but of course it's a lot more complicated than that. Medicare--and every other program--is simply unsustainable in its current form.

While it is true that everyone else in the system carries guilt--like insurance company overhead, cost insensitive patients, drug company behavior, and on and on, pointing the finger at the other guy doesn't count for the sake of this conversation--those are all legitimate issues but also provide a pass for physicians not dealing with their own issues here.

So, what is the answer?

"If you touch me I will abandon my senior patients," is not an answer. That's just a threat--and an unrealistic one at that. Even with a deal this month to defer the cuts, the SGR already has an automatic 21% cut set to occur on January 1, 2010--the problem is literally growing at an exponential rate. Stalemate on all of this just means physicians have to live with the current mess indefinitely.

Where does the physician payment problem go from here?

This month's fight over Medicare physician fees: Run For the Hills, the Doctors Are Coming, the Doctors Are Coming!!!!

Earlier post: There Won't Be Any Health Care Reform Without Physician Payment Reform and There Won't Be Any Physician Payment Reform Unless the Docs Lead The Way