Politics and Your Practice: Pick One – Money or Control

November 15, 2006

In search of a long-term solution to Medicare's troubles.


Physician advocates say the rising costs to operate a practice, combined with a 5.1 percent planned reduction in Medicare reimbursements in 2007, are forcing physicians to turn away older patients. It gets worse: By 2015, physician reimbursements are set to drop by 40 percent.

In recent years, Congress has delayed planned reimbursement cuts in deference to complaints from the AMA and other physician groups. Indeed, the lobbying over Medicare cuts has become an annual year-end Kabuki dance among physician groups, budget hawks, and politicians.

It wasn't known at our press time whether or not a deal would be cut for 2007 that would decrease or eliminate the Medicare cuts. Regardless, a long-term solution to Medicare's problems is surely not in the offing this year. And such a solution is urgently needed: Thirty-eight million Americans are on Medicare; more than 500,000 physicians receive part of their compensation through the government program.

It's worth recalling that the American Medical Association (AMA) opposed Medicare's creation. At the time, the group presciently explained that Medicare would alter the relationship between patients and physicians and would restrict physicians' freedom to practice medicine as they saw fit.

One AMA president said in 1964: "It is axiomatic ... that control follows money when the government steps in." He was right. If Medicare reimbursements to physicians increase, so will government control.

Yet 42 years later, most physician groups appear to believe that the opposite is true. Everything would be fine, they seem to say, if only you would give us more money. Thus they are reluctant to make serious concessions.

Earlier this summer, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) sought to block the reimbursement cuts. Thomas offered to replace the planned 5.1 percent cut with an increase of about 2.7 percent, if physicians would agree to report to Medicare information about the quality of care they provide patients.

But physicians' groups said no, hoping they could fashion a better deal after the November elections. It's a big political risk.

What kind of long-term reform might be in store for Medicare?

Politically speaking, a sustainable boost in reimbursement rates will most likely involve concessions from physicians on any, or all, of three items, each one a favorite of various constituencies and legislators. They are: beefed-up reporting on patient outcomes, enrollment in pay-for-performance programs, and the adoption of electronic medical records.

A more radical solution would be to allow for private, unrestricted Medicare contracts. One group, the Association of American Physicians and Surgeons (AAPS) seems to be bucking the mainstream by urging Congress not to increase reimbursements. Instead, it wants Congress to allow for unrestricted private contracts with Medicare. The group claims its research shows physicians care more about being able to practice without government oversight than they do about their level of reimbursement.

"It's really about freedom, not the money," says the AAPS.

This article originally appeared in the November/December 2006 issue of Physicians Practice.