As January 1 rapidly approaches, most national attention has been focused on the impending “fiscal cliff”. There is however, another ticking time bomb ready to detonate on January 1- the SGR (the Medicare Sustainable Growth Rate). Part of the Balanced Budget Act of 1997, this provision was designed to ensure that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in GDP. If the expenditures for the previous year exceeded the target expenditures, then a conversion factor is employed which will decrease payments to physicians for the next year.
In what has become an annual rite of passage each new year, Congress has postponed cuts to physicians, implementing a “doc fix”- holding Medicare payments fairly constant, and carrying the mandated cuts forward as an IOU. By “kicking the can down the road”, the Federal Government has avoided reductions in physician payments (which currently average 40% lower than typical charges for services) because they fear this will drive doctors away from Medicare.
In exchange for their support of Obamacare, the AMA (American Medical Association) was promised that the SGR would be eliminated, or so they thought. They were outmaneuvered by the Obama administration and the problem for doctors hangs over their heads like the sword of Damocles. On Jan 1, the Medicare payments to doctors will be slashed 26.5%, with an additional 2% decrease in mandatory cuts as part of sequestration.
These cuts will be devastating to physicians. This problem occurred one year ago at this time when Medicare payments were withheld from doctors for as long as 3 months. For many physicians in primary care, or in solo and small medical practices, and particularly those who have large concentrations of Medicare patients, major adjustments were made – some actually closing their practices. This time, the carnage promises to be much worse.
The biggest victims are the 48 million seniors who rely on Medicare and the promise by the Federal government that they will be able to see a doctor and access the system. Seniors are finding it increasingly difficult to find physicians who will see them and this unfortunately will soon reach epidemic proportions.
Until recently, access to physicians was not a major issue, although in the Spring of 2012, an investigative team of reporters in Raleigh, N.C. discovered that >50% of doctors were not seeing new Medicare patients. Avik Roy reported in Forbes this Fall that between 23-30% of doctors in Florida and Virginia stopped accepting new Medicare patients. These figures are consistent with the data reported from surveys of physicians by Jackson Healthcare and by the Physicians Foundation. In the 2012 Medical Practice and Attitude report by the Foundation, they asked doctors what they would do if Medicare rates were decreased by 10%, and discovered that 28% would limit their Medicare practice and that 35% would leave the program entirely.
With an almost 30% cut in payments to physicians looming, the repercussions are unfathomable. Two major medical societies- the American Academy of Family Physicians (AAFP) and the American College of Physicians (ACP) recently informed their membership that they needed to prepare for rough times ahead. Options that might have been unthinkable in the past have been suggested, including temporarily reducing staff or office hours, delaying non-urgent, routine appointments for Medicare patients, or changing one’s contractual arrangement with CMS (centers for Medicare and Medicaid Services). Doctors can choose to be Medicare participants, Medicare non-participants, or private contractors for services to seniors (dropping out of Medicare entirely). But doctors have to make this decision before December 31, so there may be a significant number of doctors who change their status in the next few days in anticipation of drastic cuts in reimbursement.
As much as the Obama administration wants people to believe that healthcare is done and we need to move on, this is hardly the case. Unfortunately, we have yet to see the extent of the damage that this law will reap on the healthcare system and on individuals. Sadly, seniors will be the first to bear the brunt of this and it is coming sooner than most people could have imagined.
Hal Scherz is the President & Founder of Docs4PatientCare. He is a full time pediatric urologist at Children’s Hospital of Atlanta and a clinical associate professor of urology at Emory University. Please visit http://www.docs4patientcare.
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