Insight, analysis & opinion from Joe Paduda

< Back to Home


A few more dollars for docs, a lot fewer dollars for PT

The one-month Medicare physician payment fix passed the House yesterday and will be signed by President Obama. As Congress is operating under ‘Pay as You Go’ rules, the additional cost of the increased 2.2% for physicians had to be offset – and physical therapy was picked as the victim. PT will take a big hit – a 20% reduction in Medicare reimbursement.
This umpteen-gazillionth short-term Medicare physician payment fix will expire at the end of 2010, and when it does, Congress will have to either:
a) pass a long term fix, or
b) pass another extension/short term fix.
As loyal readers know all too well, I don’t see this ridiculously ludicrous situation getting resolved anytime soon, because a permanent fix will require the fixers to acknowledge a $300 billion (and growing) addition to the deficit. While no one likes the Sustainable Growth Rate methodology, it’s a heckuva lot more likeable than having your name associated with yet another addition to the deficit – especially these days.
The Medicare SGR formula/process was set up seven years ago to establish an annual budget for Medicare’s physician expenses. Each year, if the total amount spent on physician care by Medicare exceeded a cap, the reimbursement rate per procedure for the following year would be adjusted downward.
And for the last seven plus years, reimbursement – according to SGR – should have been cut, but each year it was actually raised, albeit marginally. The result is a deficit that is now almost 300 billion dollars.
Way back in the early days of this blog, I wrote about what was then a 4% cut and the attendant furor surrounding the issue: “Complicating the matter is the pending 4.3% decrease in the fee schedule slated to go into effect on 1/1/06. If Congress reverses the cut, then 2007 premium and deductible increases will be even higher than projected.”
Congress couldn’t muster the votes/guts/brains to deal with a 4% cut five years ago, so now we’re facing a 25% reduction on 1/1/2011...
So, what’s going to happen>
Well, a couple of folks in Congress are pushing for a twelve month extension so they have time to work on a permanent solution. While I admire the intent, I just don’t see the Dems and Reps coming together on a solution to such a politically-charged issue.
As I said a couple weeks back, the new Congress is all excited to change the way business is done in Washington.
How they deal with SGR, the $300 billion deficit recognition problem, furious seniors and really cranky physicians will tell us a lot about whether they’re serious about making hard decisions, or just naive.
My money’s on the latter.

5 thoughts on “A few more dollars for docs, a lot fewer dollars for PT”

  1. Joe,
    Our understanding is that when any cut is enacted (in this case PT) the adjustments are made by changing the relative values of the affected procedure codes. Can you confirm that? Thanks,
    Steve Cattolica
    California Society of Industrial Medicine and Surgery

  2. A 30-day fix to the sustainable growth rate (SGR) formula is obviously not nearly enough for America’s patients. For the last three years, Congress has continuously passed short-term fixes without ever addressing the need for real payment reform.
    Congress once again opted for a band-aid fix rather than a real sustainable solution. In just 30 days, we’re likely to be back in this same position with a lame duck Congress passing the buck to a new Congress while leaving patients to battle heart disease without access to critical life-saving care.
    I hope that Republicans and Democrats in Congress will use these next 30 days to work out a plan that provides a realistic window for engaging the physician community and reaching a permanent solution that rewards physicians based on the quality of health care they deliver.

  3. This may seem like a dumb question but I’m just a layman and late to the party.
    When under PPACA does the newly-empowered IPAB (formerly MedPAC) get the authority to set rates? And has this anything to do with the “doc fix”? Seems to me the one will eventually obviate the other.

  4. John – welcome to MCM. Great question.
    IPAB doesn’t have the ability to set rates per se; their mandate is to come up with mechanisms to control Medicare costs if and when costs exceed legislated targets. Starting on January 15, 2014 (and annually thereafter), if CMS’ Chief Actuary projects costs are going to grow faster than that target, IPAB will make recommendations to Congress for cutting Medicare expenditures. If Congress doesn’t OK those recommendations or pass alternatives that will reduce costs by the same amount or more, CMS must implement IPAB’s recommendations.
    The IPAB process for recommending and imposing changes to Medicare takes three years; the Chief Actuary’s determination in the fall followed the next year by IPAB submitting recommendations followed in the third year by CMS’s implementation of the IPAB or Congressional recommendations.
    These recommendations may – or may not – include changes to physician reimbursement. If they do, it will be at least 2017 before RBRVS is altered under IPAB.

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2018. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.