Political Wrangling, Formula Leaves Medicare in Limbo

A bill that would eliminate a 10.6 percent cut in doctors' fees for Medicare patients was filibustered on the Senate floor Thursday (June 26), leaving both Medicare patients and doctors up in the air over the plan while Congress began its midsummer break this week. The bill would increase Medicare payments to doctors by 1.1 percent next year, while keeping them at their current levels for the rest of this year.

After being overwhelmingly approved by the House by a vote of 355 to 59 on June 24, the bill moved to the Senate, where Republicans endlessly debated to block a vote on the bill. A narrow vote of 58-40 on Thursday left the bill two votes short of the 60 needed to end the filibuster. Sens. John McCain, R-Ariz., and Edward M. Kennedy, D-Mass., did not vote, while Majority Leader Harry Reid, D-Nev., changed his initial vote from yes to no, in order to bring the bill back up when Congress resumes on July 7.

Republicans and Democrats are at odds over the bill because the proposed funding that would be taken from cuts in federal payments to the Medicare Advantage program, offered by major insurers including UnitedHealth Group, Humana Inc., Aetna Inc., and Blue Cross and Blue Shield, among others. president Bush has threatened to veto the bill stating that it would "change the private fee-for-service program and consequently reduce access, benefits and choices" for older Americans. Democrats argue that payments to insurers in the program are too generous. Studies support the Democrats point of view, stating that the private plans cost the government more per person than the traditional program.

A 'Temporary Hold'
The department of Health and Human Services on Monday (June 30) announced it would not process Medicare claims through July 15, allowing the Senate to come up with a solution to the bill when it recon-venes. The announcement came under fire from Democrats. Sens. John Rockefeller, IV, D-W.Va., and Charles Schumer, D-N.Y., sent a letter to Health and Human Services Secretary Michael Leavitt stating that the current law already requires that Medicare claims are withheld for two weeks in order to avoid fraudulent claims.

"It is our view that this administration is misleading the public by claiming to provide a 'temporary hold' on payment which is already authorized by law in order to give the appearance of being helpful to doctors in the Medicare program," the letter stated.

The end result is that if the matter is not resolved by July 15, the 10.6 percent cut will trickle down to some 600,000 doctors that see Medicare patients. "This cut is simply unacceptable. Not only does a cut of this magnitude make it difficult to maintain a viable practice, it also inhibits our ability to provide Medicare patients with the access to quality care that they deserve," said Jack Lewin, MD, chief executive officer of the American College of Cardiology.

Nancy H. Nielsen, MD, president of the American Medical Association, stated that "we stand at the brink of a Medicare meltdown." The cut in doctors' fees will end up "forcing many physicians to make the difficult choice to limit the number of Medicare patients in their practices...The Senate must return from their recess and make seniors' healthcare their top priority," she said.

One Little Formula
This is not the first time that Congress has dealt with cuts in physician payment fees. In 2006, Congress froze payments retroactively to the previous year's level, which took six months to repair. Doctors faced 5.4 percent cuts in 2002 and didn't receive any help from the legislative branch that year.

What's behind the cuts is a formula, the Medicare Physician Fee Schedule, which is updated annually as required by law. The current system was implemented in 1998 to counteract changes in the volume of ser-vices being delivered per beneficiary. The formula starts with the Medicare Economic Index (MEI), a measure of inflation faced by physicians with respect to their practice costs and wages.

The system is adjusted up or down based on what is known as the Sustainable Growth Rate (SGR). This system aims to control spending on doctors' services by reflecting differences between the actual amount of spending and the spending target set by the government. The rate moves upward if the actual spending is below the target, downward if it's above target.

Combined, the MEI and SGR account for the 10.6 percent cut this year, if Congress isn't able to find a resolution. And it gets worse — the Centers for Medicare & Medicaid Services today announced a 5.4 percent cut in the Physician Fee Schedule for 2009. Plus, the Congressional Budget Office estimates that payment fees will continue to be cut between 4 and 5 percent more a year through at least 2012. All of this leaves a big mess on the hands of lawmakers to handle in a crucial election year.