Renewed Threat of Medicare Pay Cuts Leaves Doctors With 'Sense of Fatigue'

By Jessica Marcy, Andrew Villegas and Christopher Weaver, KHN Staff Writers

This article was published by Kaiser Health News.

Doctors across the country find themselves – once again – putting their Medicare claims on hold while they wait for Congress to take action.  For the fourth time in six months, physicians are facing a 21 percent cut in their Medicare reimbursements.  This cut is an outgrowth of a law passed by Congress more than a decade ago to try to hold down Medicare costs under a formula called the sustainable growth rate.  Under this formula, pay cuts kick in when Medicare payments to physicians outpace certain economic targets.

Congress has deferred the pay cut every year, except one, since the cuts began in 2002.  And each time, the amount of the reduction has grown.

For physicians, this payment-cliff scenario is an increasing source of frustration. While lobbyists urge Congress to enact a permanent payment fix to provide stability to the system, doctors in individual practices regularly brace for the reimbursement roller coaster. Some are so discouraged that they no longer accept Medicare patients.

The Senate is currently considering a bill that contains the pay fix, as well as a number of other unrelated tax breaks and provisions for jobless Americans but many members are wary of the cost of the legislation. The bill, which has passed the House, would delay the cuts and in fact would give doctors a 2.2 percent increase starting June 1 and another 1 percent increase in 2011.

Kaiser Health News checked in with several physicians to find out their thoughts on the current situation and what impact it is having on their practices and patients.

Dr. Jen Brull

A family physician from Plainville, Kan., Brull sees 2,500 patients at her 9-year-old practice. About 22 percent of them have Medicare -- accounting for between 35-40 percent of her income.

In April, the last time the Center for Medicare and Medicaid Services - the federal agency in charge of the program - held payments while Congress grappled with a short-term fix, Brull had to juggle a $10,000 temporary drop in revenue while claims were held up. Currently she gets about $75 to $80 per visit from Medicare, and if the 21 percent cut were instituted, she would stand to lose nearly $16  to $17 per Medicare patient visit. "I have a sense of fatigue with this whole issue," Brull said.

Nonetheless, Brull said she wouldn't drop her Medicare patients or lay off staff if the scheduled cuts go through, although she says she would probably need to see a few more patients every day and work a little harder to make up the difference. She adds she's likely to just bite the bullet if the reductions come. Patients drive 30 miles to Plainville from Hays, Kan., because they hear she's still accepting Medicare patients.

"These are our friends and neighbors," she said. "There’s no way I'm going to say 'I don't take Medicare.'"

Dr. Jason Marker

Marker, a family physician from Wyatt, Ind., said about 35 percent of his 2,700 patients are Medicare beneficiaries. If the 21 percent decrease were instituted, it could mean a 15 percent reduction in his pay. He currently receives $60 from Medicare for each regular office visit — which accounts for about 35 percent of his income. If Congress doesn't act, he could see that amount cut by nearly $13 per visit.

But for Marker, who has worked for eight years in this small town not far from South Bend, dropping Medicare patients is also not an option. "I remain eternally an optimist that this is going to get figured out eventually," he said, adding that the possibility of a cut makes him nervous because he is expanding his practice to take on a partner and remodeling his office. Although the work should be done in two weeks, he will have to repay the new loan he took out to finance it. "I've been saving my pennies and saving my dimes to work with the bank on my remodeling project." 

He also has concerns about what larger cuts could do for the health of his patients and their ability to access care. "I do worry about my patients and I do worry what the system holds for them," he said. "The money part will sort itself out for me."

Dr. Gregory Thomas

Thomas is a cardiologist at Mission Internal Medical Group in Mission Viejo, Calif. He said his practice has "the cash flow to handle a month's delay." But, getting through a month or two doesn't make planning for the future any easier.

Thomas doesn't think Congress will allow the deep cuts to happen, but if they do, his practice may be forced to withdraw from Medicare and become a concierge service, charging patients retainers to have access to doctors. "That is not what we want to do," Thomas said. "We have a tradition of … caring for people, even if they can't pay." But, the pay cut would be untenable for the business.

If that does happen, patients with low incomes "would be resentful and feel that the government and their physicians are not keeping up their end of the bargain," said Thomas, who is a member of the American College of Cardiology. "I love being a cardiologist, but I still have to pay my staff. I feel that I have kept up my end of the bargain. For me to wake up and find the government's going to cut my salary, that much doesn't feel right."

Dr. Joel Bolen

Nearly all of Bolen's patients are on Medicare, which pays $78 for a complex office visit. He said that he is the only physician in Montgomery taking new Medicare patients and that he knows three doctors who have retired this year because of the ongoing payment issues.

The payment instability has long been a problem within his practice. "We have already eliminated one staff position and that has resulted in a major reduction in some of the services." For example, he points out how he handles drug prior authorizations. It used to be that, if he prescribed a drug and the insurance company didn't want to cover it, he would spend time on the phone fighting the insurer's decision. "At this point, I basically have to tell [patients], we don’t have the staff or the time to handle [this situation] because you have to do a lot of research to show all the drugs that they've tried. So, I'm basically telling the patients that they can either purchase what I'm prescribing or they can do with an inferior drug or they don't get it at all." 

In addition, he said, the practice faces cash flow problems and, at times, barely meets payroll and other obligations, including his own salary. The threat of Medicare payment cuts could make those problems worse. "With the 21 percent payment cut, we're looking at a loss of revenue of $12,000 per month," he said.

Dr. Jerry Winakur

Winakur has practiced internal and geriatric medicine in San Antonio, Texas, for almost 35 years. He works at Pasteur Medical Associates, a group he founded in 1990, and almost 85 percent of his patients are Medicare recipients. "I'm completely dependent on the Medicare fee schedule," he said.

Winakur is paid about $65 for an office visit. If the current cut goes into effect, that would drop by about $13. "My physician group will have to take a hard look at how we continue to stay in practice," Winakur said. "But I pretty much have my group of patients who I minister to and as long as I'm in practice, I will continue to see these folk and they know it."

Nonetheless, he said the constant threat of reimbursement reductions is "demoralizing" and the cuts doctors are now facing would create a major crisis. Using round figures to make the math easier, he described the impact the scheduled cut could have on a physician who has an annual salary of about $100,000 and has overhead expenses of $140,000.  If nothing else changes, a 20 percent cut would mean that the practice would take in $48,000 less or $192,000, and that would mean, after expenses, the doctor's salary would be $52,000.

Larry Epstein

Medicare pays Pulmonary and Allergy Associates, a specialty practice in Summit, N.J., $111 for a typical office visit. If the cuts go into effect, the price will plummet to around $87. If similar reductions rippled across all the services the clinic provides to Medicare patients -- about 40 percent of the practice's $14 million in revenue -- the losses could total $1 million a year, said Epstein, the clinic's chief executive.

"There's no way we'd be able to recoup that fully through overhead reduction," he said, so the doctors at the clinic will either have to take home less money, or find more business through referrals to make up the losses. Many doctors say such cuts would mean they would no longer accept Medicare payments, but Epstein said, "there's no way in a pulmonary practice that we could cut Medicare patients."

The ongoing delays as Congress weighs its approach to the fee cuts cause problems of their own, he said. "I came in today, we didn't get one single penny from Medicare. Maybe they'll catch up. Maybe they won't. You're left juggling the ball hoping you can make payroll at the end of the month." It would almost be better to face the cuts -- if Congress decides not to make a permanent fix -- than continue to face the annual limbo, Epstein said.