President Barack Obama signed a bill to “fix” payments to doctors by Medicare — until November. Although costing taxpayers $6.5 billion, this short-term patch will just have to be “fixed” again right after the next election. Throwing more money at a broken Medicare reimbursement schedule is what passes for bipartisan success in Washington.
On June 25, President Barack Obama signed a bill to “fix” payments to doctors by Medicare — until November. Although costing taxpayers $6.5 billion, this short-term patch will just have to be “fixed” again right after the next election. Throwing more money at a broken Medicare reimbursement schedule is what passes for bipartisan success in Washington.
Without the “fix,” Medicare would have immediately executed a scheduled 21 percent cut to doctors’ Medicare reimbursements. At issue is the Sustainable Growth Rate, which Congress imposed in 1997. The SGR attempts to limit Medicare’s payments by the overall rate of inflation, rather than faster-growing medical price inflation. The American Medical Association has lobbied for more money since the SGR started to bite almost a decade ago, and Congress has executed short-term “fixes” every few months since then.
These “fixes” allow Congress to avoid responsibility for out-of-control growth in Medicare spending. They are compromises between the Democratic majority, which is unwilling to cut other government spending to pay for a bigger “fix,” and the Republican minority, whose version would have paid for a longer-term “doc fix” until the end of 2012 by hacking away at unspent stimulus funds, freezing federal workers’ wages and cutting nondefense spending by 5 percent.
Nor have the fake “fixes” changed the fact that Medicare is plunging headlong into the same crisis of access that all single-payer, government-monopoly, health care systems endure. Last October, the Mayo Clinic decided it could no longer accept Medicare patients at its two primary care clinics in Arizona. The media are now full of reports by seniors that they cannot find a physician who will take them; and physicians are increasingly going public about their rationing of appointments with Medicare beneficiaries.
The AMA’s proposed solution is effectively a “cost-plus” method by which physicians would have no incentive to limit the claims that they send to taxpayers. And it fails to attack the problem at the source.
The SGR is the symptom, not the cause, of the crisis. The real problem with the fee schedule is that the federal government attempts to calculate the price and value of each medical service by using a formula called the Resource-Based Relative Value Scale, or RVBS. This system was first implemented in 1983, designed by an economist who calculated, for example, that a hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. Overall, he figured that the hysterectomy took 4.99 times as much work as the psychotherapy!
The AMA can never recommend getting rid of this Soviet-style foolishness because it drives its business. The AMA is a monopolistic supplier of codes that physicians need to submit claims to Medicare. Almost 80 percent of the AMA’s 2009 revenues — $210 million — was revenue from publishing, especially products pertaining to these codes.
The federal government needs to pull the plug on this system, and convert Medicare’s budget for physicians to individual vouchers. This would limit taxpayers’ liability and allow Medicare patients and their doctors to determine the value of medical procedures.
The government also could liberalize the popular, private, Medigap plans, allowing seniors to buy Medigap plans that cover extra physicians’ fees beyond the value of the vouchers. This practice would be similar to France, where the government recognizes that its fee schedule is inadequate and allows many physicians to charge extra. Private insurance usually covers the balance.
The AMA and politicians of both parties have demonstrated that they are more interested in perpetuating the government-medical complex than restoring the doctor-patient relationship. The federal government needs to get out of the business of fixing physicians’ fees before more seniors lose access to medical care.
John Graham is director of health care studies at the Pacific Research Institute.
