NY Times
By ROBERT PEAR
WASHINGTON, April 3 - Doctors are mobilizing a nationwide lobbying campaign to stave off cuts in their Medicare fees as Congress hunts for ways to rein in the soaring cost of the insurance program.
Because of a quirk in federal law, Medicare will cut payments to doctors by 4 percent to 5 percent in each of the next six years, Bush administration officials say.
"This is a very difficult problem," Michael O. Leavitt, the secretary of health and human services, said last week. "Unless something changes, there will be quite substantial reductions in physician fees."
Doctors said that if the cuts took effect, they would be less likely to treat Medicare patients because the payments would not cover the costs of care.
Dr. Nancy H. Nielsen, the speaker of the House of Delegates of the American Medical Association, said the cuts "would have a devastating effect on access to care" for elderly and disabled patients.
The association is urging its members to make telephone calls and send e-mail messages to Congress, which reconvenes this week, and it has organized a nationwide network of patients to "help stop the cuts." It has also devised posters for display in doctors' offices, saying that the cuts threaten "physicians' ability to serve Medicare patients in the future."
Any action by Congress would affect beneficiaries and perhaps other taxpayers as well. Premiums are adjusted each year to cover about 25 percent of Medicare spending for doctors and other health care professionals. So if Medicare pays doctors more, premiums will rise even more than projected under current law.
The basic premium, $78.20 a month, has increased 33 percent in the last two years. The Bush administration predicts that premiums next year, for basic coverage and the new prescription drug benefit, will total about $125 a month, or $1,500 a year.
Advocates for Medicare beneficiaries are torn. They express alarm at the prospect of higher premiums. But they worry that doctors will refuse to take new Medicare patients if payments are cut.
"Rising Medicare costs have a direct impact on premiums," said Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group. "But if payments to doctors are cut significantly over several years, beneficiaries could have problems gaining access to physicians, especially in rural areas."
John C. Rother, the policy director of AARP, said that a modest increase in Medicare payments to doctors might be appropriate. But Mr. Rother said: "The cost should not be factored into the premiums for beneficiaries. Given the extraordinary increase in premiums in recent years, we cannot tolerate much more."
The latest annual report from the Medicare board of trustees, issued on March 23, said that federal law, as it now stands, would produce "physician payment updates of about minus 5 percent annually for six consecutive years, beginning in 2006."
Those are not just reductions in the rate of growth, but cuts in fees that would be paid for each service - a cumulative reduction of 26 percent by 2011.
Doctors say Medicare should pay them more because they are spending more for supplies, office personnel and malpractice insurance. In official estimates of federal spending and the deficit, Congress and the Bush administration have assumed a continuation of current law, which calls for the cuts in doctors' fees. Just to keep fees at current levels would thus generate new costs under the accounting rules used by the government.
A confidential memorandum to Mr. Leavitt describes the situation this way: "Keeping Medicare physician fees at the current 2005 level - a 10-year freeze - would cost about $110 billion in federal dollars, increase the federal deficit by the same amount, and increase beneficiary premiums by about $35 billion."
General tax revenues cover about 75 percent of the cost of Part B of Medicare, which pays for doctors' services. Congress is under immense pressure to reduce the budget deficit, but lawmakers listen closely to their physician constituents, and many see merit in the doctors' concerns.
"The current Medicare payment system for physicians is unsustainable," said Representative Nancy L. Johnson, Republican of Connecticut and the chairwoman of the Subcommittee on Health of the Ways and Means Committee. "We cannot allow Medicare's payments to doctors to fall through the floor while the cost of providing care continues to rise."
Representative Pete Stark of California, the senior Democrat on the subcommittee, said Congress should proceed with caution. By increasing the number and complexity of the services they provide, he said, doctors can maintain or increase their incomes even if the fee for each procedure is reduced.
In more than two decades of work on Medicare, Mr. Stark said, he has found that medical societies are far more likely to seek "more money for their members" than to lobby for legislation to help their patients or the uninsured.
Many doctors, like cardiologists and ophthalmologists, depend heavily on Medicare. But fees paid by private insurers and other government programs are often linked to the Medicare fee schedule. So Medicare policy has implications that extend beyond the 41 million beneficiaries.
The impending cuts are an unintended result of a complex formula used to pay doctors. The formula sets goals for spending each year, based on economic growth and other factors. If spending repeatedly exceeds the goals, Medicare reduces the fees that would otherwise be paid in later years.
As Congress considers ways to slow the growth of Medicare, doctors find themselves competing against hospitals, nursing homes and other health care providers for a limited pot of money.
"Physicians have a very legitimate concern that needs to be addressed," said Richard J. Pollack, the executive vice president of the American Hospital Association. "But the doctors' problem should not be solved by cutting Medicare payments to hospitals. That would just create another set of problems."
William A. Dombi, vice president of the National Association for Home Care, said he worried that Congress would help finance an increase in payments to doctors by imposing a co-payment on home health services. Home care agencies and advocates for the elderly say such a co-payment would amount to a "sick tax."
The Medicare formula, established under laws passed in 1989 and 1997, was supposed to establish a "sustainable growth rate" for spending on doctors' services.
But Glenn M. Hackbarth, the chairman of the Medicare Payment Advisory Commission, an independent federal panel, said the formula had severe flaws. It sets a national goal for spending, with "no incentive for individual physicians to control the volume of services" they provide, he said.
Mr. Hackbarth added, "And it is inequitable because it treats all physicians and regions of the country alike."
