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Medicare pay cuts worry isle officials

Hawaii health officials, doctors and advocates for seniors are anxiously looking to Congress for a permanent fix to the formula that has triggered repeated Medicare physician payment cuts.

They say Medicare clients are having trouble getting appointments with doctors because of the payment crisis, which is compounded by the state’s physician shortage, especially in rural areas.

About 193,333 islanders –15 percent of the population—were enrolled in Medicare in 2008, according to the Kaiser Family Foundation.

"It’s bad for them, and what about new people on Medicare?" said Bruce Bottorff, AARP Hawaii associate state director. He said the short-term patches Congress has used to prevent the cuts over the years have created "a great deal of anxiety by Medicare patients and the doctors who serve them."

"It’s extremely difficult and vexing," Bottorff said. "People need peace of mind to know they can turn to a doctor."

George Greene, Healthcare Association of Hawaii president and chief executive officer, said Hawaii already has the nation’s lowest Medicare spending rate per beneficiary under formulas developed in the 1980s based on utilization and cost.

"We had low utilization and low cost. Some people would say that means good-quality care. Now … we’re being punished for the fact that we had low utilization and low cost."

Greene said Hawaii annually receives about $5,600 per Medicare beneficiary, compared with $14,000 to $16,000 per beneficiary in Miami and Manhattan. "That means there is less money in the market going to providers—physicians specifically."

The formula used by the Centers for Medicare and Medicare Services (CMS) to set physician reimbursement rates—based partly on growth in the gross domestic product—has caused a series of pay cuts. Congress has always frozen the reimbursements or slightly increased them.

However, a 21 percent Medicare physician pay cut delayed twice this year by Congress went into effect June 1 with no congressional solution.

The House passed a bill May 28 with a 29-month patch giving doctors a 2.2 percent raise for the rest of this year retroactive to June 1, followed by another 1 percent raise in 2011, then a 33 percent cut in 2012. But the Senate took no action before a Memorial Day recess.

CMS put a 10-day hold on medical claims—due to end tomorrow—to give Congress time to pass legislation to stop the pay cut.

"I wish they would fix the formula," said Mary Rydell, Pacific Area CMS representative. Holding the claims for 10 days, then processing them, is costly and affects doctors for service given June 1 and after, she said.

The formula used to set physician reimbursements was adopted in 1992 and cuts have been scheduled over the past nine years, she said.

She said a 21 percent cut "is a pretty big chunk and they think we don’t pay them enough as it is."

April Troutman Donahue, Hawaii Medical Association executive director, said: "There is a lot of frustration and I know just anecdotally a number of physicians are not accepting new Medicare patients. … Combined with our physician shortage, it exacerbates the situation."

There is no way physicians can handle the 33 percent cut scheduled in two years and Congress would have to figure out how to offset that, she said.

As the medical website Medscape explains, the formula sets an annual target for Medicare spending on physician services based partly on the sustainable growth rate. If spending exceeds the target, Medicare is supposed to decrease physician payments the following year to recoup the difference.

Whenever Congress postpones a cut, as it has done since 2004, the difference between targeted and actual spending on physician services accumulates, resulting in increasingly bigger cuts.

Greene noted that U.S. Health and Human Services Secretary Kathleen Sebelius will hold a summit this fall on an $800 million provision in the health reform law to address geographic variations in Medicare payments.

"You have to believe, given we are dead last out of 50 states, we’re going to be at the front of the line in receiving some improved Medicare spending," Greene said.


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