Impending Physician Fee Cut Underlines Congress' Quandary Over Permanently Fixing Fee Formula

Once again, on Thursday, physicians will face a huge cut in Medicare reimbursements resulting from Congress' failure to extend a short-term patch to delay implementing the sustainable growth rate formula.

Congress went on a two-week recess on Friday without taking action, but CMS has promised to hold off what now amounts to a 21.3 percent reduction until Congress returns on April 12.

When it returns, Congress is expected slap another one-month patch on the problem, once again putting off a call for permanently removing the SGR and replacing it with a more reasonable payment formula.

The reason Congress keeps dancing around the problem, observers say, is that it will be tremendously expensive at a time when lawmakers are already on the hook for passing a very expensive health reform law. Physicians would like physician payments to switch to the Medicare Economic Index, which would cost $556 billion in extra federal funding over the next ten years, according to the Congressional Budget Office.

Because of the huge cost, the law firm of EpsteinBeckerGreen predicts Congress will settle for a partial fix of the SGR, linked to gaining higher efficiencies from physicians. Under this scenario, Congress would allow E&M codes to rise, based on the MEI, while maintaining the SGR for major and minor procedures, anesthesia, imaging and testing. Funding would come from reserves earmarked for reforming the Medicare payment system for physicians, created in the House Budget Committee's budget resolution for FY 2010.

Such a plan, however, would not go over well with physicians, particularly the specialists whose procedures would stay on the SGR formula. A new informal poll of AMA members found that 68 percent would limit the number of Medicare patients they could treat when the cut takes place. The AMA, a strong supporter of the President's plan, now finds itself not having solved its members key concern — reimbursement.

In addition, a new poll from the American College of Surgeons and Operation Patient Access found that more than one-third of surgeons and anesthesiologists would change their Medicare status to nonparticipating if the cuts when into effect. They would have to wait another year, however, because the March 17 deadline to change status for this year has passed. Another 29 percent in the ACS poll said they would opt out of Medicare for two years and privately contract with Medicare patients, which they can do at any time.

Until now, however, physicians have been moving closer to Medicare, according to CMS Spokesperson Ellen Griffith. She told Becker's Hospital Review today that while the agency does not yet know how many physicians chose not to participate this year, "we do know that every year so far, the percentage of physicians who elect to participate has gone up, and last year exceeded 95 percent."

"We don't normally track opt-outs," Ms. Griffith adds, "but we have no information indicating that the number of opt-outs in significant."

Still, it is clear that if Congress did allow the cut to go into effect, it would be devastating for physicians. Ms. Griffith says average reimbursements would fall from $374.20 to $294.57 for a colonoscopy and from $65.67 to $51.70 for a typical office visit.

But CMS has given Congress the chance to fix the problem when it comes back by holding claims for 10 days after April 1, which comes on top of a 14-day hold that CMS normally puts on claims.

When Congress comes back, only action by the Senate is needed. The House of Representatives already passed a one-month fix. When the Senate returns April 12, it has scheduled a cloture vote on the House bill for 5:30 p.m. that evening, MGMA reports.

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