Fiscal cliff deal's 'doc fix' comes at a price

Washington-In just another month, the federal government will be at the precipice again with lawmakers and the White House wrangling over increasing the debt limit and how to cut spending. Urologists and other physicians have a substantial stake in the outcome because a 2% across-the-board cut for Medicare providers will be imposed if no resolution is reached-and further reductions are possible.

The “fiscal cliff” deal that was finally passed on New Year’s Day wiped out the 26.5% Medicare payment cut scheduled to take effect Jan. 1 due to sustainable growth rate (SGR) formula requirements, but the $30 billion cost was largely paid for by other health care spending reductions. That action, of course, did nothing about reforming the SGR and once again sets up a similar scenario a year from now.

“The 1-year patch by no means is what the AUA nor the Alliance of Specialty Medicine have proposed or recommended,” said James C. Ulchaker, MD, chair of the AUA’s Legislative Affairs Committee. “We feel the right way of doing this would have been to provide a permanent solution and not have another one of these 1-year patches.”

So, that remains one of the AUA’s top legislative priorities for the year, and it’s a steep hill to climb, Dr. Ulchaker acknowledged, given the intense pressure on federal spending that exists in Washington. But he said the AUA will continue to work with the Alliance and other allies and will seek to educate the 86 new members of the House of Representatives and 12 new Senate members regarding the problems with the SGR and the need to fix it for good.

Fortunately, said Dr. Ulchaker, most current lawmakers now understand the problem. However, he added, to fix the problem properly will require “some internal fortitude on both sides.”

This latest “doc fix” was paid for by cutting $10.5 billion from projected Medicare hospital payments over 10 years for inpatient or overnight care through a downward adjustment in annual base payment increases. It also reduces Medicaid disproportionate share payments to hospitals by an additional $4.2 billion over the next decade. In addition, the deal reduces payments for end-stage renal disease, saving $4.9 billion; implements competitive bidding for diabetic test strips purchased in retail pharmacies, saving $600 million; and reduces risk-adjusted payments to Medicare Advantage plans, for a $2 billion savings.

“The cuts to hospitals can be of concern to urologists who are hospital-employed physicians,” Dr. Ulchaker noted. “If the payments to hospitals are going to be diminished, that has to affect hospital-based physicians in some manner.”

The deal will also affect many independent urologic providers who operate small businesses, given the tax increase for those with incomes over $400,000 per year. Combined with other increases provided by the Affordable Care Act and the impending 2% sequestration cut, the pressure on provider income certainly continues to intensify, he observed.

As the debt limit deadline nears with discussions over how to avoid that 2% reduction, there is concern about what further cuts will be imposed on health care providers, including urologists. If President Obama and Democrats resist reductions in entitlement program benefits, such as raising the Social

Security eligibility age and/or imposing an income “means test” on Medicare recipients, the pressure for actual spending cuts will intensify.

Cuts from GME, imaging services possible House Speaker John Boehner (R-OH) and other Republican leaders have said that for every dollar cut from sequestration, equal reductions must be made in federal spending to compensate. So, there is worry about where those cuts will be imposed.

Dr. Ulchaker is concerned that graduate medical education, which he considers to be underfunded as it is, might feel the pinch. Both President Obama and the 2010 deficit-reduction commission supported the idea of reductions there, and the Congressional Budget Office has estimated that consolidating spending on graduate medical education could save $70 billion over the next decade.

However, with growing concern about the increasing shortage of physicians, including urologists, physician groups say cutting education spending would be counterproductive and would only worsen the physician supply at a time when our population is aging and large numbers of Americans are signing up for Medicare every day.

Another area for possible savings that could directly affect urologists could be an effort to reduce payments for advanced imaging.

Dr. Ulchaker pointed out that the Medicare Payment Advisory Commission (MedPac) recently recommended “leaving in-office medical devices alone,” and said the AUA steadfastly opposes any changes that would inhibit urologists’ ability to provide this service to patients.

“One of our top priorities is to ensure that in-office ancillary exceptions remain viable to protect access to care for patients, and we at the AUA see that as a very important issue,” he said.

Many of the key provisions of the ACA take effect in 2014, and regulations are currently being developed by the administration to implement them.

“We are going to play an active role in how this law is implemented,” Dr. Ulchaker promised. “We want to make sure that the ACA is implemented in the right way the first time around. Just because the 2012 election is over doesn’t mean our work is done.”UT

Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.

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Bob Gatty c/o Urology Times, at UT@advanstar.com