Medicare Payments: A Second Front on Health Reform

The health care reform bills in Congress aren’t the only game in town.  The Wall Street Journal reported on Thursday that payment reform in Medicare is also underway, through the Centers for Medicare and Medicaid Services, the agency that sets rates for Medicare Physician Fee Schedule.  Primary care reimbursements will go up – a step long overdue.  Given the fact that Medicare is the Big Dog of payors, and any reforms they adapt tend to get quickly implemented by private insurance, there’s hope that primary care will soon be better compensated across the board.  But it will do so by reducing the total reimbursements for some specialties.  This could be a positive step for medicine, or it could unleash a flurry of lobbying, hand wringing and destructive rhetoric.  CMS may be opening a second front on the fight for health reform.

The details are not for the technically squeamish.  CMS sets the payment rates for over 7,000 services and procedures, so tracking who is likely to get paid what is beyond confusing.  It’s not like the release comes out and says, “We expect radiologists to get a 10% pay cut.”  I’m relying heavily on the analysis of blogger and ER attending Shadowfax to help me make sense of it all.  The short version is that some of the most lucrative scans, tests and consultations are being reduced in rate to something closer to what a primary care doctor would get charged for a similar consultation.  As you can imagine, this hits those specialists who utilize scanning technology the most.  Shadowfax explains:

Hardest hit among specialists are Radiation Oncology, Nuclear Medicine, Interventional Radiology, Cardiology, and Radiology, all of which see >10% decreases in direct compensation.  This may in fact be understating the impact, in that the compensation will also be cut for certain diagnostic procedures such as echocardiography (-42%), coronary angiography (-24%), as well as the payments for CT, MRI and PET scans, and radiologists often (though certainly not always) own the equipment being used to perform the scans.

The cuts aren’t coming willy-nilly.  Rather one of the arguments for limiting these payments is based on the cost of keeping up the equipment and how often it’s in use.  The old payment scale presumed many of these scanners are only in use 50% of the time, so they should be compensated higher in order to break even.  The reality is many of them are in use 90% of the time, and have become cash cows for providers and hospitals, leading to a perverse incentive to order still more tests and procedures, often “just in case.”  Whether the decision is conscious or unconscious, the fact that such procedures are so lucrative unquestionably leads to overtreatment, and increased health care costs that don’t lead to better health.

Tying these cuts to increased reimbursement for primary care is a two-for-one.  There’s no question that Medicare undervalues primary care providers, and doing so creates economic pressures that have lead to a shortage of primary care providers, and too few Americans having regular access.  Internal Medicine, Geriatrics, and Family Practice will see a bump of 6 to 8%, and Pediatrics will get a raise of 4%.  That’s a start.

But there are problems with moving this reform through CMS.  The first is that the Obama Administration has targeted imaging services specialties more than procedural specialties.  As Shadowfax says, “the compensation for general surgery, neurosurgery, orthopedic surgery, opthamology, anesthesiology and others actually go up, some as much as the primary care specialties!”  That’s not likely to create a sense of shared sacrifice in the physician community so much as an implicit judgment that some specialties are worth it (orthopedic surgery) and some specialties are overpaid (cardiology) – not the way to win hearts and minds.

Second, instituting payment reform through CMS rules has had a spotty history because it can so easily be put on hold by Congressional action.  Every year, the Sustained Growth Rate formula to cut down on Medicare physician reimbursement is a target of furious lobbying by the American Medical Association, such that it never actually takes effect.  Congress steps in at the last moment and votes a one-year moratorium.  It’s not inconceivable to see the same furious lobbying and the same Congressional vote to allow the reimbursement rates for primary care to increase, but to put a moratorium on the cuts to specialists that’s meant to fund it.  It’s everybody’s favorite reform – paying more without actually providing the funding to do so!

Third, physicians have a role to play in lobbying for health care reform – and many progressive doctor organizations have eagerly embraced the role.   Will they stick with it if their own radiologist, cardiologist, and radiation oncologist reimbursements are on the menu?