MedPAC report calls for 1.1% doctor pay raise in 2010

The commission concluded that access to physicians is stable but recommended a shift of more funds to primary care.

By — Posted March 9, 2009

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Lawmakers late in February received their official advice on how to adjust Medicare physician rates in 2010 from the Medicare Payment Advisory Commission. The call for a 1.1% doctor pay update next year gives Congress a reference point for its debate on how to address a looming 21% cut.

The recommendation appears in MedPAC's annual payment report to lawmakers released Feb. 27. Lawmakers are not required to take the congressional agency's advice, but the recommendation often influences debate. The 1.1% physician update that Congress approved for 2009 was the same size as the update MedPAC sought in last year's report.

Physician organizations, including the American Medical Association, have welcomed MedPAC's call for a pay increase in 2010 instead of the double-digit reduction required by current law. The commission settled on the 1.1% figure at its January meeting. After the decision, AMA Board of Trustees Chair-elect Rebecca J. Patchin, MD, said the Association "appreciates MedPAC's recognition that cutting Medicare physician payments by 21% next year is untenable."

MedPAC once again acknowledged that the sustainable growth rate system that dictates physician pay is flawed, stating in its report that the "existing SGR formula does not provide incentives at the individual physician level to control volume growth, and it is inequitable across physicians."

In its analysis of whether current rates are enough to maintain seniors' access to care, MedPAC concluded that "most indicators of payment adequacy are positive and stable, ensuring that most beneficiaries can obtain physician care when they need it."

But the commission is increasingly concerned about access to primary care services and doctors. The commission discovered that within the small share of beneficiaries -- 6% -- who reported in a survey that they recently had looked for a new primary care physician, nearly one in three reported problems finding one.

MedPAC was so concerned that primary care services are undervalued and at a significant risk of being underprovided that it renewed a previous recommendation that would shift more Medicare money to that area. If Congress takes the advice, payments for primary care services would be higher when they are provided by physicians considered primary care doctors.

"We think the physician payment system currently doesn't incent primary care," said Mark E. Miller, PhD, MedPAC's executive director. "The physicians and practitioners who predominantly provide these types of services ... should get between a 5% and 10% increase for those services."

But because such a change would be budget neutral for Medicare, Miller acknowledged that payments to other specialty services would go down if MedPAC's proposal on primary care were accepted. He estimated that decreases would be as small as 1%. "I want to be clear: It is a decline, and other specialties do not like this proposal," he said.

MedPAC continues to be concerned that certain imaging services could be mispriced. It called on Congress to direct the Health and Human Services secretary to increase the equipment use standard for imaging machines from 25 to 45 hours per week.

Congress also received recommendations that would put Medicare private plan pay more in line with what the fee-for-service program pays. MedPAC advised Congress to eliminate a special stabilization fund designed to keep regional PPOs in the program and to set benchmarks that the Centers for Medicare & Medicaid Services uses to evaluate private plan bids at 100% of fee-for-service costs.

The HHS secretary also should calculate clinical measures that would permit CMS to compare Medicare Advantage plans with the traditional program, MedPAC said. About 22% of beneficiaries were enrolled in private Medicare plans in 2008, the commission estimated.

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Advice to Congress

In addition to recommending a pay raise for all physicians in 2010 and additional pay for primary care physicians, the Medicare Payment Advisory Commission recommends in its March report that Congress:

  • Provide a payment increase of 0.6% for ambulatory surgical centers.
  • Mandate that physicians report financial relationships with drug and device manufacturers for online posting.
  • Provide a cost-based payment increase for hospital inpatient and outpatient services, with additional adjustments based on quality performance.
  • Freeze payments for skilled nursing and inpatient rehabilitation services.
  • Freeze home health pay in 2010 and speed up coding adjustments to reduce payments by 5.5%.
  • Revise the way Medicare pays for a hospice episode of care.
  • Reduce the indirect medical education payment for teaching hospitals by one percentage point, to 4.5%.

Source: Medicare Payment Advisory Commission (link)

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