Urologists rally to block looming Medicare pay cuts

June 1, 2007

About 110 urologists met in the nation's capitol in March to learn more about the important public policy and payment issues shaping practices across the country.

Washington-About 110 urologists met in the nation's capitol in March to learn more about the important public policy and payment issues shaping practices across the country. The prime issue raised at the second annual Urology Joint Advocacy Conference of the American Association of Clinical Urologists and American Urological Association is the prospect of deep cuts in Medicare physician reimbursement, a development that could affect payments from all health care payers and insurers.

The long-term solution to the situation requires major changes in the sustainable growth rate (SGR) formula for calculating annual physician payment updates. Policy makers on all sides agree that the current approach fails to reflect real costs to physicians for furnishing health care services to Medicare beneficiaries. But lack of consensus on how to fix the system, plus escalating pressure on the federal government to halt skyrocketing Medicare expenditures overall, has de-layed reform once again. As a result, urologists are campaigning hard against payment cuts proposed for next year, pending a broader reform solution.

The Centers for Medicare & Medicaid Services currently is scheduled to cut physician rates by 9.5% in 2008, and, once again, physicians will work to "convert a reimbursement cut to a pitiable increase or freeze," predicted William Plested III, MD, current president of the American Medical Association and a thoracic and cardiovascular surgeon in Santa Monica, CA. "We have not had a raise since 2001."

The Medicare Payment Advisory Commission (MedPAC) has recommended that physicians receive a 1.7% increase next year that reflects increases in practice costs. Ronald Castellanos, MD, a Cape Coral, FL urologist who sits on the MedPAC board, considers the proposed rate increase a positive sign, but one that will require a hard effort by physicians to achieve.

MedPAC waffles

Meanwhile, significant reform of the SGR formula appears unlikely this year. When Congress approved a last-minute reprieve to the scheduled 5% physician rate reduction for 2007, the aim was to provide breathing room for policy makers to devise a more acceptable long-term solution to the payment problem.

Unfortunately, MedPAC failed to agree on a recommendation for SGR reform in its March 2007 annual report to Congress. The expert committee instead offered Congress two solutions that take very different directions, explained Dr. Castellanos, who, as one of the few physicians on MedPAC, may be the "most powerful urologist in the United States," according to his colleagues.

One MedPAC option is to scratch the SGR formula and replace it with one that reflects physician practice costs. That approach, Dr. Castellanos said, "hopefully would promote efficiency" by paying more for higher quality care and increasing incentives to coordinate care, reduce overuse of services, streamline treatment, and encourage doctors to work more cooperatively with hospitals.

The other proposal would expand SGR expenditure targets over time to all Medicare providers, such as hospitals, nursing homes, home health providers, and others. Dr. Castellanos acknowledged that he adamantly opposes this approach because it extends a deeply flawed system. The current SGR formula treats all physicians the same, with no differential for good performance; it fails to distinguish between desirable and undesirable spending growth; and it gives doctors an economic incentive to see more patients and provide more services.

"The SGR formula is broken and unsustainable, so why do we want to expand it?" Dr. Castellanos asked.

No easy solutions