Congress is actually increasing physician Medicare pay

Recently, the 21 percent cut in Medicare physician reimbursements was replaced with a 2.2 percent pay hike.

Later this year, Congress will have to consider the matter once again, just as it has ever year since 2003. This is the third time this year that Congress has averted Draconian cuts to physician’s payments. What, you might wonder, is going on?

Here is the back-story. In 1997, Congress enacted a so-called “sustainable growth rate” (SGR) mechanism to keep Medicare physician reimbursement rates in check. Congress has never allowed the full cuts called for under the SGR formula to take effect and it never will.

Why don’t legislators simply repeal the cuts to doctors’ fees that they have been postponing for years? Why just put off the measure for another six months?

Because too few of our elected representative possess the chutzpah to stand up and say that blind across-the-board cuts were an extraordinarily dumb idea in the first place. Nevertheless, most legislators understand that this crude solution will never be implemented. They know that while Medicare overpays for some services, it underpays many doctors. The “Affordable Care Act” that President Obama signed in March recognizes this fact; this is why it provides a 10 percent bonus for primary care doctors (pediatrics, internal medicine, family practice, geriatrics) as well as general surgeons who practice in areas where medical professionals are in short supply.

At the same time, Medicare is reducing reimbursements to doctors who have purchased or leased testing equipment worth more than $1 million for their offices. Research shows that in such cases, doctors order twice as many tests, exposing their patients to unnecessary risks.

Nevertheless, physicians who oppose they like to call “Obamacare” will use the recent postponement to scare seniors by pretending that a sword still dangles over their heads. “I may have to stop seeing you,” some physicians will say. “This reform legislation is going to lead to a Medicare meltdown.”

The day after the Senate approved the reprieve, the Washington Post ran an op-ed by Dr. Michael Newman, a clinical professor of Medicine at George Washington University, who wrote as if the postponement were merely a ruse, and that at some in the future Congress plans on enacting a “21 percent reduction [that] will make it prohibitive for many physicians — internists, geriatricians and family practitioners in particular — to continue caring for their Medicare patients. Congress’s annual moves to postpone further cuts in reimbursement amount to budgetary cosmetics that convince no one of the system’s soundness.”

Newman did not mention the scheduled 10 percent bonus for internists, geriatricians and family practitioners, nor did he mention the 2.2% pay increase that replaces the 21 percent cut.

It’s worth emphasizing that health care reform has nothing to do with the SGR formula that calls for whacking Medicare reimbursements. As noted, this ill-conceived law passed in 1997, long before today’s reformers came on the scene. At the time, legislators never thought it would lead to enormous cuts. The SGR formula compares growth in Medicare payments to physicians to GDP growth. In the late 1990s, GDP was growing nicely. It wasn’t until 2002 — five years after the legislation was enacted — that the formula called for a reduction in doctors’ fees. In the years that followed GDP growth remained sluggish, and the deferred cuts built to 21 percent.

Congress did not attempt to repeal the SGR as part of the Affordable Care Act because conservatives would have argued that this made reform too expensive. But everyone understood that legislators would address the SGR in separate legislation, and now it seems that they are figuring out how to cover the cost of a repeal without adding to the deficit.

In the end, many physicians will benefit from the reform legislation. Granted, some specialists well see reimbursements trimmed for selected very lucrative services. But under reform, all physicians will be eligible for bonuses if they deliver safer more efficient care that lead to better outcomes for patients. And financial incentives that encourage better collaboration among physicians should improve working conditions for many.

Maggie Mahar is a fellow at The Century Foundation and the author of Money-Driven Medicine: The Real Reason Health Care Costs So Much. She blogs at Health Beat, where this post originally appeared.