Doctors' Medicare Pay Cuts Killed;
Fund Likely to Shrink

By Susan Jaffe, Plain Dealer Reporter

December 17, 2006

For the fifth time in four years, Congress has erased a pay cut for physicians, without providing money to cover the $1.8 billion cost.

The move will force Medicare to raid a dwindling reserve fund that the government tapped after each of the four previous pay-cut reversals.

And that's not all.

The legislation approved about 1:30 a.m. Dec. 9 also included a bonus for doctors who report whether they follow suggested treatment procedures. The bonus will equal 1.5 percent of what a doctor earns to treat a Medicare patient. A doctor doesn't have to do the procedures to receive the bonus, just submit the report.

"If he knows he's going to report it, that will encourage him to do it," said Ellen Griffith Cohen, a Medicare spokeswoman.

Medicare won't verify the reports, aside from possible spot checks, or disclose them to patients or the public, she said.

U.S. Sen. Charles Grassley, the Iowa Republican who chaired the Senate Finance Committee, and other supporters say the bonus is an incentive to provide good care and assures that physicians can continue to practice medicine.

Critics like California Democrat Pete Stark, who will head a House health subcommittee next year, argue that doctors don't deserve a bonus for what they were already paid once to do.

Several private health insurance companies have similar incentive programs to improve how doctors care for patients, including Kaiser Permanente in Ohio .

Doctors reporting the quality of care they provide isn't new, either. Medicare has a voluntary reporting system in which 10,000 doctors intend to participate.

The bonuses, along with erasing what would have been a 5 percent pay cut, will cost an estimated $3.1 billion over two years, according to the Congressional Budget Office.

Of Ohio's congressional members, only Republican U.S. Sen. George Voinovich and Democratic U.S. Rep. Dennis Kucinich of Cleveland voted against the measure, which was part of a lengthy bill that also addressed tax, trade and other health-care issues.

In July, Voinovich was among 80 senators who signed a letter to the Senate leadership in support of erasing the cut and asking that the doctors get a raise.

Fixing the problem should not be tied to a bill that Voinovich believed was "fiscally irresponsible and not a good use of taxpayer dollars," said his spokeswoman, Garrette Silverman.

To come up with the money for the physicians, Medicare officials will do what they've done the last four times Congress eliminated a pay cut for doctors: take millions of dollars out of a reserve fund that a Medicare actuary has said is already running low.

Since 2002, doctors have been paid $22.7 billion from the fund, which currently has $32.6 billion.

"We've not been able to increase the reserve as much as we anticipated," actuary Kent Clemens said.

Medicare officials had to raid the fund because Congress eliminated the pay cut after the agency's deadline for setting beneficiaries' monthly premiums, which cover 25 percent of Part B services including doctor's visits.

Next year's monthly premium will increase 5.6 percent, to $93.50.

Congress required the pay cut in the Balanced Budget Act of 1997, which was supposed to curb government spending.

The American Medical Association has lobbied strenuously against the cut, which has occurred only once since the budget law took effect.

"I'm a small-business person," said Dr. Colette Willins, a Westlake family physician who is part of an independent physicians group. Medicare insures about half its patients.

"If my overhead keeps rising and my reimbursement keeps decreasing, I can't keep my business open and I can't care for my patients," she said.

She has called and e-mailed members of Congress to urge them to not cut the Medicare reimbursement. She also wants lawmakers to fix the payment formula that requires the reduction.

"They're putting a Band-Aid on it again," she said. "When you take a Band-Aid approach rather than solving the problem, you get closer and closer to the cliff."

The prospect of a bonus won't help much, either, Willins said.

"I don't need an incentive to give my patients the best I can," she said. "I try to do that every day."