Doctors brace for possible big Medicare pay cuts

November 13, 2010 By RICARDO ALONSO-ZALDIVAR , Associated Press
Dr. Kathryn Wagner, a breast cancer surgeon, poses for a photo at her offices, Wednesday, Nov. 10, 2010, in San Antonio. Wagner and other doctors are rebelling over a 25 percent cut in Medicare fees that goes into effect Dec. 1 _ unless the lame duck Congress staves it off. Wagner will stop taking new Medicare patients if the cut goes through. Wagner has posted a warning in her waiting room about a different sort of risk to patients' health. The sign says she'll stop taking new Medicare cases if Congress allows looming cuts in doctors' pay to go through. (AP Photo/Eric Gay)

(AP) -- Breast cancer surgeon Kathryn Wagner has posted a warning in her waiting room about a different sort of risk to patients' health: She'll stop taking new Medicare cases if Congress allows looming cuts in doctors' pay to go through.

The scheduled cuts - the result of a failed system set up years ago to control costs - have raised alarms that real damage to Medicare could result if the lame-duck Congress winds up in a partisan standoff and fails to act by Dec. 1. That's when an initial 23 percent reduction would hit.

Neither Democrats nor newly empowered Republicans want the sudden cuts, but there's no consensus on how to stave them off. The debate over high deficits complicates matters, since every penny going to make doctors whole will probably have to come from cuts elsewhere. A reprieve of a few months may be the likeliest outcome. That may not reassure doctors.

"My frustration level is at a nine or 10 right now," said Wagner, who practices in San Antonio. "I am exceptionally exhausted with these annual and biannual threats to cut my reimbursement by drastic amounts. As a business person, I can't budget at all because I have no idea how much money is going to come in. Medicine is a business. Private practice is a business."

The cuts have nothing to do with President Barack Obama's health care overhaul. They're the consequence of a 1990s budget-balancing law whose requirements Congress has routinely postponed. But these cuts don't go away; they come back for a bigger bite.

Doctors have muddled through with temporary reprieves for years. This time, medical groups estimate that as many as two-thirds of doctors would stop taking new Medicare patients, throwing the health program for 46 million older and disabled people into turmoil just when the first will become eligible.

Health care for military service members, families and retirees also would be jeopardized because Tricare payments are tied to Medicare's.

Former Medicare administrator Gail Wilensky, a leading Republican policy expert, says lawmakers coming back to Washington next week better take note. "We simply cannot let physicians take a 23 percent reduction in payment and think that we are not going to seriously disrupt access for beneficiaries," Wilensky said.

Yet there's no agreement among lawmakers and the Obama administration on how long a reprieve to grant or whether the cost - about $1 billion per month - should be added to the deficit or paid for with spending reductions elsewhere.

The last reprieve, in June, was paid for after a struggle to come up with offsets acceptable to Democrats and Republicans. The deadline for congressional action expired, plunging Medicare's claims system into confusion for weeks.

How did it get to be such a big mess?

There's widespread recognition that the way Medicare pays is flawed because it rewards sheer volume of services, not quality results. But there's no agreement on a better way.

So in the 1990s lawmakers devised a formula for cuts as an automatic braking system to keep Medicare humming along at a sustainable growth rate.

Except every time costs went up, they hit the override button. Repealing the formula now would cost more than $280 billion over 10 years.

The American Medical Association is calling for a 13-month reprieve that would give Congress time to work on a new payment system; the administration supports that approach.

"The single biggest step we can take to strengthen Medicare ... is to make sure these disruptive cuts don't take effect," said Health and Human Services Secretary Kathleen Sebelius. "We will ultimately need a permanent fix ... but in the meantime, we don't want any doctor to be stuck in a limbo where they don't know week to week how much they'll be paid."

The AMA and Obama would settle for adding the cost to the deficit. Most Republicans and many conservative Democrats want it paid for.

Aides to the Senate Finance Committee chairman, Sen. Max Baucus, D-Mont., say he's working toward the longest possible extension that will get the 60 votes needed to pass the Senate.

Last summer, when Congress missed the deadline for an extension, Wagner had to tap her line of credit to pay the salaries of her nurses and office staff. Medicare is only a fraction of her practice, but the said private insurance companies also held up payments waiting to see what would happen. "I didn't get a check in the mail for almost a month," she said.

As a doctor, she recognizes there could be grave consequences if she follows through on not taking new . Older women are more likely to have malignant disease than younger patients. "Those are cancers that are waiting at the door," Wagner said. She would continue to see established patients.

But she's getting closer and closer to the breaking point with .

"Stick me with a fork," said Wagner. "I'm done."

More information:
American Medical Association:

Congressional Budget Office:



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not rated yet Nov 13, 2010
Just to lay it out there before anything else, i am not from the US.

Obama`s campaign slogan was/is "change we can believe in". Obama is not the reason this slogan is no longer applicable today(speaking about medicare..). It is the fault of the opposition(who will certainly kill the new medicare plan to the detriment of the US as a whole), and the fault of all private medicare corporations whose overabundantly lavish existence came to be because government allowed it to.

not rated yet Nov 13, 2010
President Obama took a harsh stance on medicare and pushed it so hard because he knew there`d be too much resistance(as there almost always is with change). If he were to take it lightly he would have been pounced on and would never have gotten this far.

It is too bad that fear overrules courage and it seems an attempt will not even be made. After-all it wouldn`t be the end of the world if it doesnt work, it can always be changed back.

As for the doctors threatening the population with the refusal for new patients, i don`t really know what to say except for have a look at their yearly salaries/ or the net profit of the private corporation they work for. Pretty sure they make at least 10 times the average american, so... what they got to complain about?
not rated yet Nov 13, 2010
When it is not profitable to practice medicine, will the state force people to be doctors?
not rated yet Nov 13, 2010
No, doctors don't make 10 times what the average american makes. It would be nice if you would not make inappropriate assumptions like that. How about if I assumed, without proof, that you made ten times more than the average american and then cut your ability to make money based on that assumption. That is what the government does. You cannot stay in business if your expenses are higher than your receipts. Medicare payments, which doctors have to accept, are already running a narrow profit margin. A 25% cut would mean working for free. I would do that if everyone else, including you, does that.
Also, according to Forbes, 6 out of the top 10 highest paid people in this country are HMO directors. The top one made more than $300 million per year. If you add of of those salaries up, how many doctor's or hospital's salaries can you pay per year. How many people can get health care that do not now?
not rated yet Nov 13, 2010
i apologize for my post even though i tried to keep my head straight on the issue in the end my bias still came out. I should have left out that last sentence. Richgibula, thanks for your informative post. It is disheartening almost to disgust to find out that the Health Maintenance Organizations suck up so much more money than the actual hospital premises and employees. In fact i just got seriously sick to my stomach just thinking about it. It kind of seems to me that the insurers have an ungodly amount control when it comes to how the whole system runs, considering the disproportionate amount of $$ that ends up with them.

Pls explain the way those medicare payments work in context of the relation it has with the patient/state /hospitals/HMO.
not rated yet Nov 14, 2010
When it is not profitable to practice medicine, will the state force people to be doctors?

Doctors have existed for a long time, and many of them did not get paid for it. Priest, shamans, Native American medicine men... my point. No matter what happens there will ALWAYS be good doctors. After all there are plenty of teachers out there, good ones too, and look at how crapy we pay them.
not rated yet Nov 16, 2010
Thank you your question. I have been a little tied up for the last couple of days.
It hard to put this in perspective, but the answers are easy, not easy to understand. In the past Medicare and insurance companies used the idea of "usual and customary" which a lot of people did not like. Other industries called that idea "fair market value."
The government thought that they could improve on the cost of healthcare by telling doctors and hospitals what they could charge. Meanwhile, the cost of doing business rises dramatically with insurance costs, number of employees required, etc, so profit margin sank. In many states, primary care physicians do not accept Medicare since, in their state, Medicare payments are below overhead.
not rated yet Nov 16, 2010
This is a difficult situation to be in because most of the healthcare dollar is spent on people over 65. Patients then have to go to physicians who either run a huge number of patient through the office (with little care) or are employed by someone else who is willing to takes losses to get the patients (i.e. hospitals).
Then when hospitals run into financial problems, they can command their physicians to see more patients in a day.
None of these situations are good for patient care. Then, if the government lowers what it pays, and you can't bill the patient, how can the doctors stay in business? I think that the government is hoping that physicians can charge non-Medicare patient more to make up for losses, but that is not going to happen with HMO's or other private insurances following Medicare's lead in telling us what we can charge a patient.
not rated yet Nov 16, 2010
I don't think that most Americans have a clue just how dangerous the current system is for getting healthcare in the future. I believe that what American banking did for American's money in the recent past is what insurance companies will do for American healthcare in the near future with medicare in the lead.
FYI, newspaper sources say that the Medicare budget is over a trillion dollars. They also say that expenses by Medicare are about $500 billion. It that is correct, that means that government workers, in the provision of medical care, make as much money as all the doctors, clinics and hospitals put together.

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