Proposed Medicare rule released by the Centers for Medicare and Medicaid Services

August 15, 2009

As members of Congress return home for August recess, the nation's dialogue continues over how best to provide health-care coverage to 44 million uninsured Americans.

Key Points

Washington, DC-Health-care reform is taking center stage this summer as members of Congress return home for August recess and continue the nation's dialogue on how best to provide coverage to an estimated 44 million uninsured Americans.

After months of debating over the best option to provide health-care insurance and how it would be funded, observers are wondering whether public opinion back home will dissuade members of the House of Representatives and Senate during their recess. Congressional leaders had hoped to pass a bill before the break.

For physicians, the dialogue centers on two issues: the proposed rule by the Centers for Medicare and Medicaid Services (CMS), which includes a 21.5% cut in fees paid to physicians who treat Medicare patients, and a reform of the overall health-care system to provide insurance to those who do not have private coverage or do not qualify for Medicare or Medicaid.

Under the rule proposed by CMS and published July 13 in the Federal Register, physicians would be forced to take a massive pay cut as a result of the temporary freezes put in place to forestall cuts in previous years. Last year, physicians staved off a cut and got a 1.1% increase, but they knew it would mean a substantial cut for 2010.

The cuts are attributed widely to the use of the sustainable growth rate (SGR) formula used to determine the fees paid to physicians. The AAO and the American Society of Cataract and Refractive Surgery (ASCRS), among other groups, agree that the SGR is skewed unfairly, in part, because it includes the cost of medications-such as those that treat age-related macular degeneration, cancer, and inflammatory disease-administered in a physician's office. Physicians have no control over these costs, so physicians should not be penalized for their increased expenses, the groups have argued.

Although the Bush administration refused to consider removing the cost of drugs from the formula, the first rule to emerge under President Obama does just that, Dr. Rich said.

"The impact of that won't be seen until 2011," he said.

Because a massive 21.5% cut would force many physicians to stop providing services to Medicare patients, few anticipate it actually will happen. Dr. Rich said he expects Congress will vote to freeze the pay for another year while health-care reform is debated.

On the plus side, the CMS rule proposes incorporating the results of a new medicine-wide survey of practice expenses. Ophthalmology emerges with the highest increase in practice expense fees of any medical specialty, Dr. Rich said.

Ophthalmologists historically have high overhead costs because of the amount of required space, equipment, and personnel. Unlike some specialties, the fees to cover those expenses have not been adjusted since 1989, he said.

"There were huge distortions of these payments when Congress allowed some specialties to do updated surveys along the way," Dr. Rich said.

After reviewing results of the survey, CMS has increased practice expense payments to ophthalmologists by 11% overall. The per-hour increase, from $103.28 to $170.08, takes effect Jan. 1.