Medicare advisory agency to back 1.1% physician pay raise for 2010

MedPAC members also vote to recommend shifting more physician dollars toward primary care.

By — Posted Feb. 9, 2009

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Congress' Medicare advisers will recommend that physicians receive a 1.1% pay increase in 2010 instead of the roughly 21% cut that is currently on tap.

The recommendation will appear in the annual March report to lawmakers from the Medicare Payment Advisory Commission, a congressional agency that counsels lawmakers on how they should set Medicare rates. Commissioners approved the proposal at their January meeting. Lawmakers do not always follow the panel's advice but often use it as a starting point for debate.

Physician organizations, including the American Medical Association, welcomed MedPAC's recommendation for an increase in 2010. "The AMA appreciates MedPAC's recognition that cutting Medicare physician payments by 21% next year is untenable," said AMA Board of Trustees Chair-elect Rebecca J. Patchin, MD. "This cut would be a tragedy for the many Americans who rely on Medicare."

In determining whether physician rates are adequate, MedPAC investigates whether enough doctors are staying in the program to maintain patient access to care. The commission found that access remains relatively good, with more than three-quarters of beneficiaries reporting they had no delays in getting an appointment.

For the roughly 6% of beneficiaries who looked for a new primary care physician last year, more than a quarter of them experienced some difficulty. But that is comparable to the experience of privately insured people, MedPAC staff said.

The commission estimated that the costs to physicians of providing care will go up by nearly 2.5% next year. But the recommended update is more than a percentage point smaller than that, because MedPAC assumes that physicians provide patient care more efficiently as time goes on.

Some commission members expressed dissatisfaction with that productivity adjustment used to arrive at the 1.1% recommended update. Physicians who practice in rural areas, for instance, see a limited number of patients and thus have a limited opportunity to increase their efficiency, said Thomas M. Dean, MD, a MedPAC commissioner and chief of staff at Avera Weskota Memorial Medical Center in Wessington Springs, S.D. "The thing that makes this formula worse is that we are required to add equipment to cover a broad range of services that we know is not going to be used efficiently. It just has to be there, because we have to have it when people come in," he said.

Ronald D. Castellanos, MD, a commissioner and a urologist in Fort Myers, Fla., also cited costs of unfunded government mandates. This "requires us to spend money if we're going to participate in the Medicare program, but it is not at all considered in any of our cost report."

In most years, MedPAC has recommended an update that tracked physician costs and productivity factors but was subject to change anytime those figures were reassessed later in the year. But because several of the commissioners expressed concerns that the productivity figure lacks accuracy, the panel agreed that the 1.1% recommendation will not be altered even if those factors change.

Focus on primary care

The commission also will recommend once again that Congress boost Medicare payments to primary care doctors by establishing a special claims modifier. The add-on would produce higher rates for evaluation and management services for those physicians than for doctors who are not considered to be in primary care.

MedPAC and some physician organizations have pushed the modifier idea because of concerns they have about the stability of primary care, particularly in light of the nation's recent economic woes. Although commissioners in the past had discussed backing a specific adjustment of 5% to 10%, no exact amount will be suggested to Congress in the commission's March report.

The American College of Physicians supports the concept of a primary care adjustment but said it isn't clear if the MedPAC recommendation would be a one-time adjustment or sustained over several years.

"We believe that Medicare payments to primary care doctors will have to receive substantial increases, not just in one year, but annually and over several years until primary care compensation is competitive with other specialties," said Robert Doherty, ACP's senior vice president of governmental affairs and public policy.

ACP estimates that Medicare payment increases of 7% to 8% per year over five years would be needed for primary care compensation to reach the 80th percentile among all specialties. Primary care doctors on average make only 55% of what all other specialists make, Doherty said.

MedPAC acknowledged that the special modifier is not intended as a long-term fix for the primary care crisis. "It's not a solution, it is a step," said Glenn Hackbarth, the commission's chair. "But it's something that can be done quickly."

Unless Congress commits additional funding to Medicare, however, any modifier that boosts primary care rates for some doctors would mean pay reductions for other services due to budget neutrality rules.

Some MedPAC commissioners warned against pushing a proposal that would cut too deeply in other areas. For instance, rates for some major procedures already have seen significant reductions to help fund higher evaluation and management pay, said Karen R. Borman, MD, a commissioner and professor of surgery at the University of Central Florida College of Medicine.

MedPAC also will recommend boosting primary care rates by further lowering practice expense relative values for some in-office imaging services.

Currently, when calculating such values, the Centers for Medicare & Medicaid Services assumes that all equipment is used 25 hours per week. By changing that standard to 45 hours per week, Congress would free up additional dollars that could be redistributed to other services.

In addition, such a change could help address the recent rise in the volume and intensity of imaging services by discouraging some doctors from buying expensive imaging machines, MedPAC staff said.

Still, all of these recommended changes would be incremental. The AMA and other physician organizations say they hope that a longer-term solution could be achieved.

Several commission members voiced particular concerns at the January meeting about the impact of the recent economic downturn on patient access to physician care. Not only is the availability of primary care doctors at risk, but also some patients might find that they no longer can afford to pay the out-of-pocket costs of seeing their physicians.

"I'm in private practice, and I'm going to tell you, patients are not coming in," Dr. Castellanos said. "I have cancer patients that are not coming in. It's a reflection of the economy."

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How they got to 1.1%

MedPAC calculates a figure for physician input price inflation, which indicates how much costlier it will be for doctors to provide care for Medicare beneficiaries next year. Then it adjusts that figure based on an expectation of greater productivity.

2.4Input price inflation
-1.3%Productivity goal
= 1.1%Update recommendation

Source: Medicare Payment Advisory Commission

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An eye on imaging

MedPAC is recommending that Congress address the continued rise in utilization of Medicare imaging services in part by shifting some of the federal funds away from that sector into primary care services, which the commission says are relatively undervalued. While cardiologists and surgical specialists stand to take some big hits from such a move, primary care physicians also have relied more on imaging in recent years to bring Medicare revenue into their practices.

Share of Medicare revenue from in-office imaging
Vascular surgery10.3%19.1%
Orthopedic surgery8.5%9.5%
Primary care4.1%5.9%

Note: Primary care includes general physicians, family physicians and internists.

Source: Medicare Payment Advisory Commission (link)

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