Payment Limbo: Medical societies take on SGR reform

As more physicians limit the number of Medicare patients they’ll see or drop out of the program, access will suffer among seniors and military families, Dr. Rohack said. That’s because TRICARE, the military insurance program, ties its physician payment rates to Medicare. Patients with chronic conditions who lose access to a doctor might hold off on treatment and present when they are sicker and more expensive to treat, he said.

“It’s interesting that the [Medicare payment] formula was not even addressed in this massive health reform legislation.”
—Pete S. Batra, MD

Practice Management

Some otolaryngologists say the uncertainty of what will happen later this year is impeding their ability to manage their practices.

“Just like any business, physicians have to forecast what their revenue and expenses are going to be each year, and if you can’t predict those, it’s hard to plan and make investments in new diagnostic or other equipment that might be needed,” said Ronald B. Kuppersmith, MD, president of the American Academy of Otolaryngology-Head and Neck Surgery.

The issue is also about quality, Dr. Batra said. If doctors can’t afford to replace aging equipment or invest in new medical technology or devices, it hurts their ability to provide high-quality care, he explained.

The implications go beyond Medicare, because most private insurers tie their physician payment rates to Medicare. “The reality is anybody who takes any type of insurance has the potential to be adversely affected,” Dr. Batra said.

The Medicare physician payment formula clashes with some of the new health delivery models, such as accountable care organizations, that are to be tested under the health reform law, Dr. Rohack said. The models encourage outpatient management of chronic conditions, which would drive up physician utilization. But the formula reduces Medicare payment if utilization rises above a target set by the formula, he explained; “What is wrong with this picture?”

Passage of a solution “is going to require bipartisan, bicameral leadership to recognize that innovation and alignment of incentives to keep people healthy and out of the hospital does require an increase in the outpatient volume of services,” Dr. Rohack said. Utilization of Medicare physician services will burgeon, regardless of new payment models, because the Baby Boom generation begins to age into Medicare eligibility next year, he noted.

A Timeline

Despite bipartisan support for Medicare payment reform, lawmakers have given up on acting before the November elections, several doctors said. In a time of economic crisis and an enormous federal deficit, lawmakers running for reelection don’t want to raise taxes, cut programs or increase the deficit, Dr. Kuppersmith said. After the election, the political climate may be more favorable, he said, depending on the economy and the makeup of the new Congress.