Actions speak louder than words. Complex political wrangling accomplished passage of the Patient Protection and Affordable Care Act [PPACA] by Congress that was signed into law on March 23, 2010. However, the Democratic controlled Congress has not shown the same will to eliminate the Sustainable Growth Rate [SGR] formula that has been a chronic problem for physician reimbursement with Medicare and TRICARE.
Facing a 21.3% cut in physician reimbursement in January 2010, SGR reform first surfaced in the aptly numbered, Senate Bill [S.B.] 1776, in October 21, 2009. The Senate fell 13 votes [Yea 47; Nay 53] short to eliminate the SGR formula and freeze physician payments for ten years. Although not indexed to future inflation, physicians were willing to trade a decade of uncertainty with inflation for the uncertainties in Congressional inaction about the SGR formula.
What became known as “The Doctor Fix”, S.B. 1776 failed to pass because the bill was not compliant with the previously passed Congressional “pay-as-you-go” provisions; spending cuts were not included in S.B. 1776 to offset the cost of avoiding the 21.2% cuts in physician reimbursement. Meanwhile, national debt limits continued to be raised by Congress, and projects like turtle paths, included in the stimulus package, had a higher spending priority than physician reimbursement. Unlike the party-line Senate passage of the PPACA on December 24, 2009, twelve Democratic Senators from Florida, Indiana, Missouri, Montana, North Dakota [2], Oregon, Virginia [2], West Virginia, and Wisconsin [2] voted against S.B. 1776. Apparently the old adage of “you get your votes before you count your votes” wasn’t sufficiently important to insure passage of S.B. 1776 like other higher priority legislation.
The House of Representatives passed the Medicare Physician Payment Reform Act of 2009 [H.R. 3961] on November 19, 2009. Busy with the PPACA, the Senate did not take up the bill. Instead, a 60-day extension of the 2009 conversion factor, expiring on March 1, 2010, was included in a Department of Defense appropriations bill that was passed at the end of December.
In early February, just a few weeks after returning from the Christmas holiday recess, rumors were circulating that another short-term patch was planned rather than pursuing a long-term fix for the SGR. However, the deadline on March 1st to avert physician reimbursement cuts was missed again. In response to this, the Centers for Medicare and Medicaid Services [CMS] notified contractors, effective March 1st, to hold Medicare physician claims for 10 business days. On the March 1st deadline, the House passed H.R. 4691, which extended a wide range of expiring programs in addition to postponing the SGR cuts until April 1, 2010. The Senate, on March 2, 2010, passed H.R. 4691.
In mid-March, with the clock ticking, H.R. 4851 was passed to extend the deadline for “The Doctor Fix” to May 1, 2010. The Senate, however, was unable to pass this bill before adjourning for the Easter recess. On April 1, 2010, the 21.3% Medicare physician pay cut, once again, was scheduled to go into effect; once again, these pay cuts were delayed 10 business days by CMS. On April 15th, three days after returning from Easter recess, the Senate passed H.R. 4851 that retroactively reinstated physician payments for Medicare patients in April, postponing the 21.3 percent pay cut until June 1, 2010. The Senate SGR proposal was then incorporated into H.R. 4213, “The American Jobs and Closing Tax Loopholes Act of 2010” just before the Memorial Day holiday.
Congress once again failed to act before the deadline. For the third time in 5 months, CMS held claims an additional 10 business days, until June 14th, to allow Congress another opportunity to consider the SGR. Given that half of 2010 has already passed, physicians realized that the cuts scheduled for January 2011 would increase to 32 percent.
On June 18th, the Senate passed an amended version of H.R. 3962 called the, “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010” by unanimous consent. The legislation provided a 2.2 percent Medicare physician payment update from June 1st to November 30th, a month after the impending midterm elections and right around the Thanksgiving holiday recess. Following House passage of the reconciliation bill, the Act was signed into law on June 25, 2010.
Three months after the passage of PPACA, Douglas Elmendorf, Director of the Congressional Budget Office [CBO], reported to Congress on June 30, 2010 that federal spending on health care was unsustainable. Two factors, the aging population and the rapid growth of health care costs per capita, accounted for the projected increases in federal health care spending. Importantly, PPACA “will cause major changes in the components of federal spending on health care”. Federal spending for Medicare due to: [1] the 7 percent growth of the retirement age segment from 13 percent to 20 percent of the population; [2] significant expansions in Medicaid and the Children’s Health Insurance Program [CHIP] eligibility under the PPACA; and [3] insurance subsidies provided through the exchanges under the PPACA would roughly double as a share of GDP over the next 25 years from 5.5 percent to more than 10 percent in 2035. This expansion in the scope and cost of federal health care programs was apparently not offset, as purported during the PPACA debate, by a $500 billion reduction in Medicare benefits over the next decade.
Without drastic changes in Congress, the prospects of repealing the SGR formula after the November midterm elections seems politically unlikely given the Congressional history of repeatedly failing to repeal the SGR formula, and the precipitous upward projections of health care costs by the CBO under PPACA. The recent CBO health care cost projections, that greatly exceeded the $900 billion estimate during the health care debate, is particularly discouraging with the $500 billion reduction in Medicare benefits that underwrote over half of the estimated cost of PPACA during the health care debate. Cutting physician reimbursement approximately 30% under Medicare and TRICARE appears an easy means of reducing the cost of PPACA. Therefore, significant cuts in Medicare will underwrite the cost of PPACA.
Also discouraging was the failure to approach tort reform under PPACA that the CBO projected could have saved $54 billion in health care costs. According to Former Democratic National Committee Chair Dr. Howard Dean, the Democratic Congress, that drafted the health care reform legislation, failed to include tort reform under PPACA due to the fear of “taking on” the trial lawyers. Obviously, the Congress doesn’t share the same concerns about physicians or Medicare recipients.
More worrisome, is the future reimbursement of physician services as the percentage of patients under federal programs continues to increase, and the demographics changes of physicians. If reimbursement falls precipitously after November, older physicians, the majority of whom are in private practices, will retire, contributing to a shortage of physicians. The government, under PPACA, also assumed control of all student loan programs. Under PPACA, students can repay their government backed student loans if new physicians take low-wage jobs in government facilities that caps monthly payments at 10 percent of income instead of the current 15 percent of income; after 20 years, any debts that remain would be cancelled. Middle-aged physicians, who, on average, carry $200,000 of educational debt at the higher rate, will be particularly affected if physician reimbursement is allowed to decline significantly. The middle-aged physician typically also has additional pressures of a house mortgage, children, and is financially incapable of retiring from medicine.
The Congressional actions over the past year send a very bad message for “The Doctor Fix” at the end of November when no political incentive exists, such as the solicitation of support for health care legislation or upcoming elections, to finally resolve the SGR issue other than simply letting the 32 percent cut in physician reimbursement to occur in January 2011.