More maydays for a Medicare meltdown

AMA Leader Commentary. By Ronald M. Davis, MD

A message to all physicians from AMA President Ronald M. Davis, MD.

Thomas R. Saving, a public trustee of the Social Security and Medicare system, published a guest column in The Wall Street Journal on May 9 in which he predicted a “Medicare meltdown.” He wrote that the meltdown will occur in the coming decades, unless huge reforms occur, because Medicare is consuming a relentlessly increasing proportion of the federal budget.

Missing from his essay was any mention of the looming crisis in Medicare payment to physicians — a 10% cut in Medicare payment beginning on Jan. 1, 2008, and projected cuts totaling about 40% through 2016. Meanwhile, physician practice costs will increase 20% during that time period.

These cuts are being driven by a flawed formula — the sustainable growth rate formula — which the AMA and many others have urged Congress to abolish. If the SGR cuts occur, huge numbers of seniors will face severe problems accessing physicians, and the meltdown predicted by Saving will happen much more quickly.

When the U.S. House of Representatives approved legislation on Aug. 1 to reauthorize the State Children’s Health Insurance Program, it included a provision to replace Medicare physician payment cuts totaling 15% over the next two years with a 0.5% increase in each year. The House bill captured funding to reauthorize SCHIP and avert the SGR cuts by eliminating overpayments to Medicare Advantage plans and increasing federal excise taxes on tobacco.

The Medicare provisions were not included in SCHIP legislation passed by the Senate and did not make it into subsequent compromise bills addressing SCHIP, one of which was vetoed by President Bush on Oct. 3. Since then, SCHIP has become further mired in partisan politics. And once again, we’re down to the wire, waiting at the end of the year (as I’m writing this in late November) for congressional action on Medicare physician payment.

Recent Congresses seem to want to wait until a crisis occurs, or until the last possible moment before it would almost assuredly occur, before taking definitive action. This pathetic yearly tourniquet approach to the SGR cuts is a perfect example of management by crisis.

We in medicine know a lot about crises through our work in disaster preparedness. We plan for, and respond to, many mass-casualty events, including terrorism, hurricanes, bridge collapses and fires.

Speaking of fires, I share a birthday with the late Red Adair, the world-famous oil field fire fighter who successfully battled more than 2,000 fires in oil and natural gas wells.

Adair’s well control company, which continues its work today, divides its services into three categories: prevention, response and restoration. Let’s apply those approaches to the looming SGR disaster.

Let’s begin with prevention. Prevention involves safety inspections. We’ve already done safety inspections, and we already see weak points in our system of care for seniors. According to the Medicare Payment Advisory Commission (MedPAC), about a quarter of seniors seeking a new primary care physician already are having difficulty in finding one to take care of them. There also has been a significant increase in the number of Medicare patients reporting problems if they need to find a new specialist physician, and this problem is worse for Medicare patients than for those with private insurance.

Prevention also includes conducting a risk assessment. We’ve done that, too. And we see huge risks if SGR cuts go through as projected.

According to our MemberConnect survey, if the 10% cut goes through in January, 60% of physicians will limit the number of new Medicare patients they accept. Even more disturbing is that 40% of physicians will limit the number of established Medicare patients in their practice if the 2008 cut goes through.

Congress can avert this fallout by scrapping the SGR. We urge Congress to tie physician payment updates to the Medicare Economic Index, the government’s own index for the costs of running a physician practice.

A few years ago, the Congressional Budget Office estimated that a permanent SGR fix would cost $90 billion. Now the CBO says that deep-sixing the SGR in favor of the MEI will cost us $262 billion. As Congress continues to kick the can down the road, effective remedies become more and more costly.

But Congress seems to ignore the benefits of preventing an SGR disaster. It seems willing to rely on disaster response and restoration.

Well, we need to tell Congress that if this imminent meltdown occurs, response and restoration will be slow in repairing the damage, will be expensive and ultimately may fail. If physicians across the country are forced to turn away Medicare patients — and lose trust in the program — they may become wholly resistant to any last-ditch effort by the federal government to respond to the crisis and to restore the program to “business as usual.”

Many physicians have told me that they doubt Congress will solve this problem unless a meltdown actually occurs. Thus, some have suggested that we acquiesce to the 10% cut — just let it go through, they say — so Congress will see that our concerns and predictions are not a poker-style bluff.

A few doctors even have suggested a physician boycott of the Medicare program. However, boycotts raise serious legal and ethical concerns.

But given the understandable anger among physicians and their calls for drastic remedies, let me highlight several courses of action available to physicians.

First, we can do what TV news anchor Howard Beale suggested in that 1976 movie “Network” — get up out of your chairs, go to the window, open it, and stick your head out and yell, “I’m as mad as hell, and I’m not going to take this anymore!”

Second, we must continue, and intensify, our advocacy efforts, talking to our representatives in Congress, and our patients, and the media, about the looming meltdown. Physicians can contact their representatives via the AMA’s toll-free Grassroots Hotline (800-833-6354) or the AMA’s online Grassroots Action Center (

Third, physicians, in the face of these huge cuts, may wish to review their Medicare participation options (see box). Physicians who wish to change their current Medicare participation or nonparticipation status for 2008 must do so by Dec. 31.

The polarization and paralysis in Washington, D.C., do not bode well for the future of any government programs. Congress is earning record low scores in its public approval ratings, and the electorate seems anxious for change.

Clearly, change is needed in the Medicare system for the well-being of our patients, the citizens of this country, the voters and taxpayers who — in a few short months — will speak.

Our job is to inform our patients and our colleagues, act responsibly and let our representatives in Washington know exactly how we feel before — not after — a meltdown.

Dr. Davis, is a preventive medicine physician living in East Lansing, Mich.
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