When Congress returns for its lame-duck session on November 15, rheumatologists are hoping that legislators will eliminate a proposed 23% cut in Medicare reimbursement to physicians scheduled to go into effect December 1, and revise the Medicare payment methodology to ensure appropriate physician payments in the future. In spite of huge lobbying efforts by physician societies, it’s still not certain what Congress will do. If the cuts go through, however, it could lead to numerous rheumatologists opting out of Medicare.
It all goes back to 1997 when the Sustainable Growth Rate (SGR) was established by Congress as a target rate of growth in Medicare Part B spending for physician services. If spending exceeds SGR targets – which it has since 2002 – then physician payment is supposed to be cut.
Linked to performance of the overall economy, the SGR target was set with 1996 spending as the base year with each year’s payment determined by comparing cumulative actual expenditures to cumulative target expenditures in the prior year. In early years, volume growth was below per-capita GDP, so payments were at or above the Medicare Economic Index. Since 2002, volume growth has increased and GDP slowed, with SGR calling for rate cuts that by 2010 total 21%. However, since 2003 Congress has repeatedly passed temporary fixes to prevent severe cuts.
“We get more and more in debt with this formula,” says Susan Hoch, MD, a rheumatologist at the University of Pennsylvania in Philadelphia who has been active in ACR advocacy. “It’s not clear that this formula is even a viable mechanism. The problem is it gets hung up in politics and no one has the political will to set a target on what we spend on physician services. To reform the SGR completely, you need bipartisanship, which isn’t likely on the horizon.”
And 2010 was a particularly rocky year. Medicare payments at the 2009 level were extended through May in various legislative efforts. Then, in late June, a new law rescinded the 21% payment cut and provided a 2.2% increase in Medicare payments through November 30, 2010.
This brings us to the lame-duck Congress that must address this issue. If the 21% cut is applied and the 2.2% increase eliminated, rheumatologists will see a little more than 23% cut in reimbursement. Meanwhile, the ACR, AMA, and others have urged Congress, at a minimum, to pass a 13-month extension prior to November 30, 2010.
What If?
If the payment cuts go through, rheumatologists who currently accept Medicare assignment have three contractual options:
- Remain a Medicare participating physician at the lower payment rates.
- Choose to be a nonparticipating physician, seeing Medicare patients on a case-by-case basis. These physicians agree to accept 5% less than participating physicians, but they can bill patients for up to 15% more (a limiting charge) than the Medicare allowance.
- Opt out and become a private contracting physician, billing patients directly. (Read “Opting Out of Medicare“ for guidelines on the opt-out process.)
Already, rheumatologists and other specialists have grappled with the loss of consultation fees since January 1, 2010. How will they react now if the payment cuts go through?
“I’ll retire,” says Paul G. Rochmis, MD, a northern Virginia rheumatologist who admits he’s nearing the end of his medical career. “This is the straw that breaks the camel’s back. The problems dealing with Medicare have become so onerous that this will make the decision much easier.” Dr. Rochmis says he closed his practice to new Medicare patients last January because he refused to lessen the amount of quality patient time.
If the payment cuts go through, rheumatologists who currently accept Medicare assignment have three contractual options.
In Long Island, N.Y., Max Hamburger, MD, managing partner of an eight-person private rheumatology practice, says 45% of his patients are in Medicare. “As a first step, we would immediately cease accepting any new Medicare patients,” he says. “We don’t have an answer yet to what we’d do with our current Medicare patients. But, we’d have to downsize the practice, let go of perhaps 20–25% of our staff, and consider one or two junior physicians.
“It becomes a question of the cost of living and whether our practice can remain viable if there is a large percentage of Medicare patients,” he continues. “This is especially true for those of us in areas where Medicare is our best payer. In other parts of the country, that isn’t the case.”
Michael Schweitz, MD, says his seven-person practice in West Palm Beach, Fla., is about 60% Medicare patients. “If cuts go through, we’ve decided we will stop seeing new Medicare patients at first and then may restrict slots for existing patients. Ultimately, we may stop altogether or opt out,” he says.
Even with the cuts, Washington, D.C. rheumatologist Herbert S.B. Baraf, MD, says his practice will most likely continue to participate in Medicare so that young doctors who’ve joined the group can fill their patient appointment slots.
Dr. Baraf’s group has wrestled with their decision, especially as they sought to better understand the economic impact if they moved to nonparticipatory status. “The 15% surcharge (limiting charge) that you can place is on 95% of the physician fee schedule amount,” he says. “So, the most the physician can see by going ‘non par’ is 109.25%, but it is likely that we would accept assignment at the reduced rate on many claims. I don’t believe the reason to go ‘non par’ is to make more money. I believe it is to make your practice less attractive to Medicare beneficiaries if your commercial plans pay for services at rates above Medicare.” An additional concern is the risk of bad debt on unassigned claims if you don’t collect up front, he says.
Dr. Baraf doesn’t expect to see many rheumatology groups opt out of Medicare because they need the referrals. “Those physicians don’t want to hear, ‘Dr. Jones won’t see their patients,’ ” he says. “If confronted with this, they are less likely to send any of their patients to you.”
And, if Congress applies another band-aid or bumps the decision making to the next Congress?
“We’ll roll with the punches,” Dr. Schweitz says. “We’ll have to take it as it comes. These are huge decisions that impact your whole practice character and revenue.
“I think Congress is starting to see there is a threat of access denial,” he added. “That’s one reason I’m somewhat optimistic that this problem will continue to have repeated short-term fixes.”
Sue Pondrom is a medical journalist based in San Diego.