Drastic Medicare cuts could hurt patient care

December 1, 2006

If physicians must endure an 8% pay cut-which also includes a 2% cut as a result of changes to the work relative value units (RVUs) and a 1% cut due to changes to the practice expense methodology-next year, they will be forced to consider limiting the number of Medicare patients they treat, trim office staff, and delay investments in new technology.

That's what several physicians and advocacy groups are saying following the Nov. 1 release of the final rule setting physician payment rates and policies for the coming year. The rule, which takes effect Jan. 1, cuts the conversion factor from $37.8975 to $35.9848.

Every year, the Centers for Medicare and Medicaid Services (CMS) must work to keep changes from inflating expenditures by applying a reduction formula to keep its budget neutral. In previous years, CMS has applied that formula to the conversion factor, but this year it is applied to the RVUs, reducing all work RVUs by 10.1% and losing some of the gains for which advocates worked so hard during the 5-year review.

Nancey McCann, director of government relations for the American Society of Cataract and Refractive Surgery (ASCRS), said she and others in the medical community had asked CMS to preserve the "integrity and relativity" of the work RVUs by applying the budget neutrality adjustment to the conversion factor.

Dr. Rich blames the Bush administration for changing the procedure-and working against the wishes of nearly every medical specialty.

"This administration at the last minute decided to apply the budget neutrality adjustment to the work values instead of the conversion factor," he said. "The net effect is it hurts physicians who provide face-to-face care in the operating room or office."

Dr. Rich noted that it benefits the advanced imagery industry by increasing payments for MRI and CT studies, and charged that the Bush administration is trying to reward its friends in that segment of the medical field. He said the administration, through "political manipulation," injected itself into the decision through a last-minute executive order, which led to perceived errors.

"This has a negative impact on the increases in evaluation and management services, primary-care services, and surgical services that have postoperative visits," Dr. Rich said.

Next year's cuts to the physician fee schedule could signify the first year that physicians actually see their payments decrease. Since 2002, Congress has intervened to prevent the scheduled "negative updates" or cuts from taking effect, and has instead extended a very slight positive update. However, due to the election, advocacy groups are not optimistic that any change is likely before the new session starts in January.

"The bottom line is physicians haven't been given a cost-of-living increase in years," said McCann. "We can't continue to do this. At some point access is going to be an issue, where Medicare beneficiaries are not going to have access (to medical care)."