Docs Warn of Medicare Cut Consequences

The nation's largest physician's group issued a call for higher Medicare payments Tuesday, even as policy makers and beneficiaries struggle with rapidly rising costs in the program.

The American Medical Association warns that a 4 to 5 percent cut in Medicare payments scheduled to go into effect January 2006 will force some doctors to stop treating elderly and disabled patients using the program.

But others warn that increasing doctors' pay would also raise premiums for millions of Medicare beneficiaries, who are already paying record monthly fees to use the program.

Higher Salaries for Doctors?

Nearly 40 percent of 5,486 doctors in a survey released by the group said the projected rate cut in 2006 would cause them to curtail the number of new Medicare patients they accept into their practices. More than 60 percent said the cuts would cause them to defer purchasing new medical equipment for their offices.

"That news should send chills down the spines of seniors in Medicare, and it should be even more alarming for Americans who are going to be entering the Medicare program in the next few years," AMA president J. Edward Hill, MD, told reporters.

Medicare payments to doctors are tied to changes in the overall economy through the gross domestic product.

The Medicare Payment Advisory Commission (MedPAC), which counsels the government on Medicare policy, issued a report last week urging Congress to replace the cut with a 2.7 percent payment increase for doctors in 2006.

Hill says his group, one of the most powerful lobbying organizations in Washington, supports the recommendation along with longer-term fixes to the way Medicare calculates its doctor payments.

But the demand will force doctors to approach Congress for more money at a time when deep budget deficits are paired with rapidly rising health care costs. The government's spending on Medicare alone went up 15 percent last year, according to the agency.

The AMA insists that its call for increased payments has nothing to do with doctors' salaries, which remain among the highest of any profession in the nation. Instead, increased spending will allow thousands of doctors to continue to protect seniors' access to doctor visits and vital medical services, Hill says.

He compares the spending to emergency funding that Congress often uses to finance special needs like the war in Iraq. "They seem to find the money when the will is there," he says.

Beneficiaries' Costs

Congress will also have to consider the problem that any rise in physicians' payments will cause beneficiaries' out-of-pocket Medicare costs to go up. The Centers for Medicare and Medicaid Services announced last week that patient premiums for outpatient doctor visits will rise $11 from current levels to $89 per month in 2006.

The increase, one of the largest ever, will come just as seniors are also asked to pay an average of $35 per month for Medicare's new prescription drug benefit in 2006.

"Premiums absolutely would go up," says Diane Archer, founder and special counsel of the Medicare Rights Center, a beneficiary advocacy group.

Archer says that increased physician payments are probably needed but that Medicare should take the money from overpayments to pharmaceutical companies and insurance companies that carry the Medicare Advantage managed care plan.

Archer argues that the program is slated to pay $3 billion more to insurers in 2005 than it pays to providers under traditional Medicare. "That money could allow Medicare to pay doctors adequately and still give patients the access they need," she says.

By Todd Zwillich, reviewed by Brunilda Nazario, MD

SOURCES: Member Connect Survey: Physicians' reactions to the projected Medicare physician payment cuts, American Medical Association, April 5, 2005. J. Edward Hill, MD, president, AMA. Report to Congress: Medicare Payment Policy, MedPAC, March 2005. Diane Archer, founder and special counsel, Medicare Rights Center.