WASHINGTON - A 21 percent payment cut for Medicare physicians, set to begin next week, led Michael Bell to delay appointments for his elderly patients by four months.
"We don't know what we're getting paid this year and we need to get systems in place before the bad news," said Bell, a 55-year-old dermatologist who practices in Murfreesboro, Tenn., a city of more than 100,000 southeast of Nashville. Bell says he now gets about $34.52 for an office visit from Medicare for his patients who are ages 65 and older.
Annual fee reductions beginning in 2002 were baked into a formula that Congress created in 1997 to slow growth in government spending. Starting in 2003, lawmakers have delayed the reductions, which accumulate as a result. That creates a dilemma while President Barack Obama is promising to rein in health-care costs, said Paul Keckley, head of the Deloitte Center for Health Solutions, a research arm of Deloitte LLP.
"If you look at the numbers we'll spend on Medicare, it's the single biggest spending in health care," Keckley, who is based in Washington, said in a Jan. 28 interview. "We aren't zeroing in on this and finding a way to reduce costs without compromising care."
The cost of Medicare is expected to grow 1.5 percent this year to $514.7 billion, or 1 out of every 5 dollars spent on health care in the United States, according to forecasts issued Feb. 4 by the Centers for Medicare and Medicaid Services, a U.S. agency. Medicare spending would grow 5.1 percent without the cut, the agency said. About 40 million people in the U.S. are 65 and older, the main group served by the health-care program.
The House voted Thursday for a one-month delay in the reductions as part of a $10 billion employment bill that also would help the jobless buy health insurance. The legislation, which the Senate may take up next week, would give lawmakers more time to debate the fee cuts.
Medicare "has no discretion" to avoid the cuts, set for March 1, said Ellen Griffith, a payment specialist at Medicare. The U.S. average fee for a "mid-level" office visit is $65.67, and Medicare pays 80 percent of the cost.
The uncertainty "makes it very hard for physicians to plan ahead, and some providers will have a cash-flow problem," said Mark McClellan, a physician and health-care analyst at the Brookings Institution, a policy research foundation in Washington.
"Most physicians probably won't close their doors to Medicare patients immediately, but they'll have concerns that they can't continue operating that way," said McClellan, a former chief of Medicare and the Food and Drug Administration.
Bell, the Tennessee doctor, said in a phone interview Thursday that he reduced his Medicare appointments 20 percent to brace for the cuts. Even if Congress steps in, Bell says, Medicare pays too little.
"For the past few years, we've had only a zero to maybe 1 percent raise in fees, while our expenses go up at least 4 to 5 percent each year," Bell said. "So we've fallen behind, and that's about as much as we can handle."
The Mayo Clinic, praised by Obama as a national model for efficient health care, said it would stop taking Medicare patients at its primary-care clinic in Glendale, Ariz., starting Jan. 1, saying the federal government pays too little.
The American Medical Association, the largest U.S. group for doctors, is seeking permanent repeal of the sustainable growth rate formula, the system that has required the annual cuts because spending has exceeded targets.
The Chicago-based organization, which claims almost 240,000 members, endorsed Obama's proposed overhaul of the health- care system. The group considers a repeal of the current formula to be part of the remake of the U.S. system, according to its Web site and statements made during last year's debate.
The House voted Nov. 19 to approve spending $210 billion over 10 years to adopt a new formula. Under the revised plan, doctors would get a 1.2 percent increase this year.
AARP, a Washington-based advocacy group for people 50 and older, also urged a permanent change.
The chances of a permanent fix dimmed after Jan. 19, when the election of Republican Scott Brown to the U.S. Senate left Democrats one seat short of the 60 votes they needed to push through an overhaul.
Obama's budget request on Feb. 1 sets aside $371 billion, to be spent over 10 years, "to reflect the administration's best estimate of future Congressional action based on what Congress has done in recent years for physician payments."
"This adjustment does not signal a specific administration policy," according to the budget request.
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With assistance from Brian Faler and Nicole Gaouette in Washington.