Physicians seek solutions to Medicare system

January 15, 2006

With Medicare payments to physicians projected to decrease, treating patients will pose more challenges to ophthalmologists who are already experiencing decreased payments.

However, George A. Williams, MD, contends that the Medicare system cannot meet this demand.

Increased costs are driven by the drugs themselves and the need for physician services to provide these treatments.

"The bottom line is physician payments. By 2013, if nothing in the current system changes, it is projected that physicians will be paid 20% less than they were in 1990. This is in the face of steadily increasing practice expenses," said Dr. Williams, chairman, department of ophthalmology, William Beaumont Hospital, Royal Oak, MI, and clinical professor of biomedical sciences, Oakland University Eye Research Institute, Rochester, MI.

To underscore the immediacy of the situation further, he explained that the allowable reimbursement of the drugs to treat AMD and the increase in physician service needed for diagnosing, drug administration, and follow-up have an adverse effect on the calculation of the sustainable growth rate (SGR).

"It is projected that if the current SGR methodology remains in effect, there will be a 20% decrease in Medicare physician payment rates by 2013. The net effect is that in 2013, physician payment rates in real dollars will be 20% lower than they were in 1990, when the SGR process began," Dr. Williams explained. "There is, therefore, a consensus among policy makers that the SGR process requires revision or replacement.

"However, there is no consensus on how to change the present system of how to pay for any change. Since 2002, yearly congressional action has superseded the SGR-mandated cuts at the cost of more than $60 billion. In the absence of a permanent fix to the SGR process, it is unknown whether Congress will continue to override the projected cuts," he said.

By the end of 2005, the Medicare expenditures were expected to be $325 billion, of which ophthalmologists received about $5 billion. This makes the net effect of increases related to ophthalmology in general and to AMD in particular negligible, based on the SGR calculations. But the costs of treating AMD within ophthalmology are expected to become a substantial part of ophthalmology-related costs. This can be appreciated when one considers that the cost of photodynamic therapy with verteporfin (Visudyne, Novartis Ophthalmics) is about $8,000 and that of pegaptanib sodium (Macugen, Eyetech Pharmaceuticals/OSI Pharmaceuticals) is about $12,000 for every case.

Retinal treatment costs

"If one conservatively assumes that only 50% of the estimated 200,000 new cases of choroidal neovascularization per year are treated with either modality at an average cost of $10,000 per patient, the total cost is approximately $1 billion per year. In addition, because all of these patients require follow-up and some require additional treatment beyond 1 year, the cumulative costs are even greater. These crude projections do not consider the additional costs of combination therapy or other future treatments awaiting approval," Dr. Williams said.

He emphasized strongly that "the system is broken and the only way to fix it is through legislative initiatives. The AAO as part of organized medicine is actively working on behalf of patients and physicians to effect a change in this process. The current regulatory environment must be altered."

In light of this pressing need for change, he encouraged all ophthalmologists to participate in the political process as much as possible by contacting local congress members and explaining the implications of the AMA data on ophthalmologists' ability to treat patients.