Doctors Fear Reform Angst Is Tainting Medicare Payment ‘Fix’

Dr. Nancy Nielsen, the immediate past president of the American Medical Association, urged lawmakers Tuesday to permanently eliminate the looming cuts to Medicare’s physician payments – something her organization has demanded for years.

The combination of a deepening budget crisis, Democrats’ plans to enact sweeping health reform and troves of baby-boomers approaching Medicare age will make the problem harder to resolve in the future, she said during a conference call.

At issue is a 12-year-old formula – passed as part of a broader bill passed by a GOP Congress and signed into law by President Bill Clinton – that requires Medicare to squeeze physician payments when they outpace broader economic growth, which they have since 2003. Congress has intervened to block such cuts to doctors’ pay in each of past last seven years. But, those “Band-Aids,” as Nielsen calls them, are temporary.

House Democrats are expected to consider a bill this week that would dispose of the formula and, instead, give doctors modest pay increases for the next decade, at a cost of $210 billion. A similar, $247 billion bill flopped last month in the Senate, where lawmakers viewed it as an unfunded threat to the deficit.

In past years, lawmakers from both parties supported blocking such temporary fixes. This year, though, the measure has become tied to Democrats’ broader ambitions to overhaul the health system. A proxy fight is now shaping up around physician payment. Democrats have an incentive to answer Nielsen’s call and push a permanent solution through Congress.

Doctors supported the Democrats’ broader reform legislation, giving it critical momentum as it cleared the House earlier this month. But the doctors’ lobby has been noncommittal about whether that endorsement will stand if lawmakers can’t deliver on the so-called “doc fix.”

Asked Tuesday whether the AMA’s support would continue if the doc fix falls through, Nielsen responded with a question of her own: Should people believe Congress’ promise to expand health care to more Americans as part of reform “if they can’t fulfill existing commitments?”

Meanwhile, Republicans have lined up in opposition to the effort. The Senate effort was opposed by all 40 Republicans – as well as a dozen Democrats and an independent. Senate Minority Leader Mitch McConnell said in a statement, “Hopefully it’s a sign of things to come in the health care debate ahead.”

GOP lawmakers are hoping to force Democrats to address the Medicare physician payment schedule in their sweeping reform legislation rather than a stand-alone bill. They say addressing the issue separately – the strategy House leaders now appear to be adopting – allows Democrats to conceal the total cost of reform.

Nielsen, who still expects the House to pass its version of the bill, cast lawmakers’ choices in terms of dreams and nightmares. If lawmakers don’t act now, she said, the situation “will become a fiscal nightmare going forward.”

When Congress blocks cuts under the current formula, the planned cuts roll into the next year. The strategy avoids immediate budgetary impacts, but the blocked cuts add up over time. Medicare planned to cut about 5 percent of physician payments at the end of last year until Congress stepped in. Next year, physicians would face a 21.2 percent cut unless Congress acts again.

Because most think it’s unlikely Congress will actual enforce such drastic reductions, Nielsen and other advocates, including some lawmakers, say those spending increases only matter on paper.

In September 2006, for instance, the Congressional Budget Office, Congress’s fiscal scorekeeper, estimated that physician payment reform would cost $218 billion – just more than the House version up for consideration this week – suggesting that Congress has managed to keep over $200 billion in federal spending off the books for years.

“When I was a little girl, I used to pretend I was a princess or could fly,” Nielsen said of the lawmakers. “Adults don’t have to do that.”