Health Care and Workplace

Medicare cuts might put Nevadans in world of hurt

By Cristina Rodriguez / Staff Writer

The American Medical Association this month issued a not-so-subtle warning to Congress, which has a directive to cut Medicare rates by 10 percent - and the authority to override that directive.

Simply enough, the association said that lower-paid physicians may just limit new Medicare patients (60 percent say so), hold back on buying equipment (72 percent) and discontinue rural outreach (57 percent), among other cutbacks. Its survey was based on 9,000 doctors.

"If they (cut the rates), we're going to see it become increasingly difficult for seniors and disabled Nevadans to get the care they need in a timely way," said Larry Matheis, executive director of the Nevada State Medical Association. "They're going to find fewer doctors available and find access to be limited."

That scary scenario has come up for about half a dozen years. So far Congress has not cut rates, but doctors still worry about the possibility.

The directive comes from a complex 1997 Sustainable Growth Rate (or SGR) formula. It calculates doctors' reimbursement rates based on many factors, including the economy.

"Recently the formula itself has been producing negative updates (or annual adjustments)," said Jeff Flick, the San Francisco-based regional administrator for the Centers for Medicare and Medicaid Services.

Congress has not been chipping back at the rates, so this year the formula would calculate a larger cut.

"If something is not done this year, then the negative update will be quite substantial," Flick said. "Here in the Medicare program, we recognize that if physician payment reductions occur over a number of years, that really could affect beneficiary access to physician services."

Matheis says the SGR formula is broken.

"The formula was meant to discourage people from staying with direct Medicare," he said. "It was built on the assumption that most Medicare recipients would go into HMOs. They didn't. It built in a negative on what it pays doctors ¦ if the number of people in direct Medicare goes up."

(Flick denies that characterization, saying the SGR formula was made only with the motive to balance the budget.)

Under Matheis' theory, Nevada would be one of the states worst hit by a Medicare cut, due to the number of seniors and a generally lower income level that makes them unable to afford private insurance plans, he said.

"It means that Nevada is disproportionably hurt by the proposed decrease in physician payments," he said.

The issue has raised interest in the state Medicaid office. In 2004, 2005 and 2006, the department surveyed doctors to see how many accept Medicare (the federal health care for seniors and the disabled) and Medicaid (the state health care for the poor). It questioned 600 Nevada doctors last year.

The most recent findings show that 90 percent of doctors in the state, and 93 percent of those in Southern Nevada, work with Medicare. Eighty-eight percent of Nevada's doctors and 90 percent of Southern Nevada's take new Medicare patients.

While the American Medical Association would like Congress to rewrite the formula, it thinks that the better fight is focusing on reform of the entire health care payment system.

The government thinks so, too.

CMS this summer will take the first steps to paying doctors based on quality of work, rather than based on procedure. The Pay for Performance model is being used intermittently among private health insurance companies already.

On July 1, the federal government will start asking doctors to report more specific data on how successfully they treat their patients. Doctors are not required to answer, but they get a 1.5 percent bonus for doing so.

"That's an indication that not only is CMS interested, but Congress is interested. This is written into law now," Flick said.

Matheis pointed out that Nevada doctors have the sympathy of their congressional leaders, including Senate Majority Leader Harry Reid and U.S. Rep. Shelley Berkley, whose husband is a doctor.

"The entire Nevada congressional delegation is aware of this," he said. "They have a disproportionate number of constituents affected by this. Working together we are hopeful that before January (when the cut would take place) some actions will be taken. Not only will we avoid this crisis, but we'll begin to really deal with the underlying problems."

All sides are interested in having payments reflect quality and efficiency of work, Flick said.

"I think there is good news on the horizon, but in the meantime the sustainable growth formula is the law," he said. "Physicians are still worried about it, and that's one of the reasons the AMA did this survey."

Cristina Rodriguez covers medical and workplace issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-2326 or by e-mail at cristina.rodriguez@lasvegassun.com.

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