Restoring the Sacred

Tuesday, October 19, 2010

Obamacare: A Perfect Storm


(Click to enlarge)

Dr. Marie Wolfgang, M.D., has been a medical doctor for 22 years. She practices internal medicine in Seaford, Delaware. She happens to be a close friend of my niece, and has given us permission to post this letter she wrote to her local newspaper. In it she gives her very professional analysis of HR 3590: The Patient Protection and Affordable Care Act (which has come to be referred to as Obamacare), and specifically its drastic effects on medicare and medicaid patients and the doctors who treat them.

Medicare—A Perfect Storm in the Making

A crisis in Medicare threatens to deepen for all those who depend on Medicare, whether it be our seniors and the disabled who are insured by the program, or the health care providers who accept it in payment for their services. While our Congressmen and our President congratulated themselves on what they call a “massive healthcare overhaul,” and “healthcare reform,” existing coverage for millions of Americans is quietly imploding. In the coming months, many independent physicians like myself will be facing difficult decisions. Can I afford to continue taking Medicare?

The massive health care “reform” bill did nothing to fix the problems of Medicare, the nation’s largest health care program. Many problems exist, problems that threaten a Medicare recipient’s access to physician care. Already, many physicians are limiting the number of Medicare patients they accept into their practices. According to the AMA, 17% of 9000 physicians surveyed in 2009 restrict the number of Medicare patients in their practice. Among primary care physicians, that number is 31%--nearly a third of these practices, including my own. My office gets calls on almost a daily basis, people looking for a doctor but unable to find one taking patients with the nation’s largest health care program!

What is wrong with Medicare, anyway? As a physician who, over the past 18 years, has grown a practice that is more than 50% Medicare, I have some perspective on the issue. Most seniors are unaware of the threats to their coverage or access, largely because the press has given the issue little attention, or has presented it in such small pieces that the whole is not apparent. This is an election year, and it behooves all who have an interest in Medicare to take notice of what is at stake. Here’s an example of what has happened in the past year.

The History of Medicare Cuts in 2010
On January 1, 2010, fees paid to physicians for Medicare office visits were scheduled to be cut by 21.3%. Both the House and the Senate voted to block this cut in December, 2009. But only for one month. In late January 2010, they voted to block the cut for 2 more months. On April 1, the cut was implemented, as Congress failed to act before going on their Easter break. CMS, The Center for Medicare Services, placed a freeze on processing physician fees for 2 weeks, at the end of which Congress finally acted, giving another 2 month reprieve on the cut. However, April hurt most physician practices—no claims were processed--or paid--for two weeks, wreaking havoc on cash flow. Another two months passed, and the reprieve on the cut expired once again.

In late May, the House voted to block the cut for 18 months, a much needed breather, with a 2.2% increase. The Senate, considering their Memorial Day week vacation, did not take up the issue, ensuring that CMS would again stop processing physician claims beginning June 1. There was no 11th hour rescue this time. After two weeks, the longest legal time that CMS is allowed to hold claims, no vote was made by the Senate. In fact, a test vote failed to pass, and the issue was tabled. Both physicians and Medicare recipients were left in perilous straits. CMS voted to hold claims yet another week, unheard of in the history of Medicare. Finally, unable to hold claims any longer after 21 days, CMS started paying claims with the disastrous 21.3% cut. A large physician specialty group in Salisbury sent letters to its referring physicians, vowing to not take any new Medicare patients. Days later, the Senate met and voted to block the cut, but only for 6 months, with the 2.2% increase as voted in the House. However, now it had to go back to the House, as both parts must sign off on the bill before the President can make it law.

The House leadership, after a period of what can only be described as pouting, finally agreed to the terms outlined by the Senate, and the President signed the bill. The net effect was millions of dollars added to the bill taxpayers must foot to fund the reprocessing of those Medicare claims incorrectly paid at a lower rate. Before CMS was ready to process new claims, it needed to be tested and retested. For my practice and many others, the net effect was no payments at all from our largest insurer for the entire month of June, with the same expenses of any other month. Worse yet, the same problem is scheduled to recur at the end of November, when the current payment system expires, and a 23 % cut goes into effect. On January 1, 2011, it will be 28 %, and the following year, 33 %. Many of us in primary care medicine run profit margins that won’t allow business to continue with a 23% cut in our fees. Is it any wonder so many physicians are turning away Medicare patients?

This is only the latest chapter of the Medicare saga. In the 1980’s, Medicare used to be the highest payor, and physician practices loved new Medicare patients. Now Medicare pays only about 78% of what private insurers pay, and Medicare recipients are searching for a home. How did it get this way?

Needless to say, costs for medical care have skyrocketed over the last 3 decades. People are living longer due to improved health care and control of childhood disease, and once deadly diseases are now chronic illnesses. This costs more. The baby-boomers are now on Medicare, swelling its ranks, which costs more as well. There are more people who are not over 65 who have Medicare for disability, and these ranks have grown. One can now anticipate some recipients to be on Medicare 40 or 50 years, or even more. This costs more. Malpractice fears fuel the issue as well, as more defensive medicine is practiced for fear of missing something. More x-rays and labs and referrals to specialists, and more labs and x-rays and on and on. This costs more, often much more.

Historical Perspective
In an effort to control costs in the late 1990’s, in conjunction with the Balanced Budget Act, something known the Sustainable Growth Rate (SGR) formula was enacted by the then-Congress. It linked growth of the economy to Medicare physician reimbursement—as one went up, the other went down, in a cumulative and ongoing fashion. In the early years, the cuts were 1 %, or 2%. At least 10 times since then, when successive cuts have come due, Congress has acted to block them, save for a 4.8 % cut in 2002, which was allowed to go into effect. Blockage of the cuts are short term patches--they “fix” nothing, They only postpone the need to find a permanent solution to the problem. In the long run, this results in exponential growth in the cost of eliminating SGR..

The bill the House of Representatives approved in May 2010 would have laid the groundwork for permanently repealing SGR and replacing it with a better and more stable Medicare physician payment update system. It would also have allowed the opportunity to increase reimbursement for primary care services, to help address the worsening shortage of primary care physician services, and would have provided a statutory guarantee that preventative services would not be cut. But the Senate left those things on the cutting room floor with its alternative bill that became law in June 2010.

I wonder, how much does it cost in terms of money, and time, for the House and the Senate to debate the same issue every year? Or, as in the case of 2010, to debate it in January, April, June and November? How much taxpayer money has been squandered in politics? In reacting, rather than fixing problems? In posturing and shooting down other ideas because they didn’t originate in one’s own political party? In business as usual? In voting increases for one’s own salary and ‘discretionary funds’, while Social Security benefits remain unchanged for another year? In voting oneself exempt from the laws and health insurance that every other American must accept?

HR 3590: The Patient Protection and Affordable Care Act
The Medicare issue is not improved at all in the health care reform legislation voted into being earlier this year. In fact, Medicare and Medicaid payments will be cut by a total of $43 billion under the law. Medicare provider cuts will include home health facilities, skilled nursing facilities, long-term care hospitals, and hospice programs. It includes new taxes on prescription drugs and on specialty wheelchairs, pacemakers and other medical devices. While it does increase payments up to 10% for primary care physician practice expenses in health care shortage areas, when measured against the 33% cut that is due at the same time, there is still a net loss in revenue for such practices. The act also will result in implementation of 159 new offices, bureaus, commissions and programs—that means a lot more government employees.

As health coverage is expanded to cover the estimated 34 million Americans who currently do not have health insurance, the current nationwide shortage in primary care services will reach critical proportions. With fewer and fewer doctors in training choosing primary care, primary care may cease to be provided by physicians at all. It is not inconceivable that such care will be delivered by non-physicians, such as nurse practitioners and physician assistants, who are employed by the government.

The Perfect Storm
Dramatic cuts in Medicare reimbursement are expected by many physicians. The election in early November will likely result in fewer incumbent retaining their seats. It is from this group of Congressmen that the next vote on the Medicare cuts will come, if it is addressed at all. It is also the time during which physicians have the opportunity to change their participation status with Medicare for 2011. Many will opt out of Medicare. Remember, as many as 31% of primary care practices surveyed limited the number Medicare patients in 2009. In a separate online survey of American physicians in 2010, 84% of physicians responded that they would stop seeing new Medicare patients, stop seeing all Medicare patients, or consider closing their practices if these cuts were not reversed. These numbers are frightening in their scope. If even half of them followed through, the crisis in access to care would be, indeed, a perfect storm.

H/T: luv2sing