Medicare incentivizes physicians to improve patient outcomes and better manage chronic disease, and then punishes the doctors financially for doing just that. That’s the Catch 22 at the crux of the American Medical Association’s call for reform of Medicare physician payments.

 

“Congress is sending a mixed message,” said J. James Rohack, MD, in an interview with Medical News Inc. Rohack was elected AMA president in June, when at its annual meeting the organization passed a new policy with recommendations on potential solutions to the problem.

 

“The major problem we see with Medicare physician payment is a formula that basically says, if a physician provides good care for a patient in a particular calendar year, then that volume of service will result in a cut in the physician payment the subsequent year. We believe that is a fatal flaw,” said Rohack, a Texas cardiologist and professor at Texas A&M Health Science Center College of Medicine. He was referring to the sustainable growth rate (SGR), originally designed to rein in skyrocketing Medicare costs by financially discouraging a practice’s increase in volume of service – ordering more mammograms, for example, or increasing the number of laboratory tests of a diabetic patient. The new AMA policy calls for the SGR’s repeal.

 

“Physicians want to do what’s right for the patients, but at the same time, they have this formula that says that as you try to provide better care for your patients, we’re going to cut your payment more,” Rohack continued. On Jan. 1, 2010, the scheduled cut is 21 percent.

 

Physicians may have found a sympathetic ear with the Obama administration.

 

Health and Human Services Secretary Kathleen Sebelius has expressed publicly her concern about the 21 percent payment slash, and the president’s fiscal 2010 budget proposal lays out a strategy for reforming the Medicare payment system by aligning payment incentives with improvements in quality and efficiency. According to budget estimates, it will take $311 billion to halt scheduled physician payment cuts called for by the SGR and hold payments steady over the next decade. Cracking down on fraud and abuse is cited as a way to recover the funds.

 

The administration’s healthcare reform push offers the AMA an opportunity to be at the forefront with its issues. “If we take a look at what we’re committed to, which is health reform this year, we know that there are certain components that have to be part of that package,” Rohack said. In addition to the SGR repeal, the AMA also is calling for:

 

Noting that “a vast majority” of the nation’s healthcare is delivered by practices of three physicians or fewer, Rohack said anti-trust laws prevent these physicians from sharing information and coordinating with other practitioners.

 

This final initiative is at the heart of another policy passed in June by the AMA, which supports what’s called the “patient-centered medical home.” Under this model, one provider is the patient’s medical home and coordinates the patient’s healthcare among all providers, thus facilitating more personal care and improving efficiencies and quality. For many people, their medical home would be an internist or family physician, but the medical home could be an obstetrician-gynecologist for a woman, a pediatrician for children, an oncologist for a cancer patient or a nephrologist for a patient with end-stage renal disease. “We believe the patient should declare who they want to be their medical home,” Rohack said, adding, “Our policy says we need to help improve care coordination and eliminate the barriers that Congress has passed over the years, which are anti-trust laws and the Medicare payment formula for physicians. Get rid of those, so that we can evolve healthcare to have better care coordination through a patient-center medical home.”

 

Rohack expressed concern that Medicare’s moves to limit physician compensation, especially since 1997, may result eventually in fewer doctors treating America’s elderly. That’s why the AMA is also pushing for physician rights to “balance bill.” Under Medicare fee for service, the patient is responsible for 20 percent of the fee, which the physician must bill the patient for even if the administrative burden of the billing doesn’t make the invoice worth the time. It also leaves physicians no leeway should they want to waive the fee for a poorer patient, he noted. On the flip side, physicians aren’t allowed to bill affluent patients the difference between the Medicare fee and their full fee.

 

Rohack said America has a healthcare sector, not a healthcare system. “We want to make sure that as we evolve into a system that patients continue to be at the center,” he said. “As physicians, we want to make sure that there are no untoward consequences of payment changes that may result in patients not getting appropriate care that they need.”