Low Medicare Payments Slam Doctors, Poll Finds

Two-thirds of doctors in Sarasota County say they will stop accepting new Medicare patients if the federal program's payments do not improve..

The stark arithmetic came in the Sarasota County Medical Society's poll of its members, released last month as the Medicare program announced its 1,481-page preliminary rule for 2008, including a 10.1 percent overall cut to what it pays doctors.

The county poll results mirror what doctors nationwide say about the repeated cuts to Medicare payments.

The problem is serious enough that for the first time in either group's memory, the American Medical Association and the AARP have joined together to lobby Congress on the issue.

Doctors in this region may be hurt worse than their colleagues elsewhere in the country.

Sarasota County has the nation's fourth-highest share of residents 65 or older and thus eligible for Medicare. Charlotte County ranks first nationally.

This week, Congress is considering ways to postpone or dilute the cutbacks. Meanwhile, past reductions play out every day in medical offices across the region.

The cost of doing business

Gene Erquiaga is not looking for sympathy.

"There's no question doctors make a lot of money," said the Venice radiologist and president of the Sarasota County Medical Society.

But consider the other side of the business ledger, he said. Most doctors have 12 years of education after high school and as much as $300,000 in loans to repay. They must pay their staff, equip an office and pay the bills that come with it.

Then comes the expense of practicing medicine. Among Erquiaga's tasks is searching for cancer and assessing the disease's progress.

One method is a nuclear medicine test that requires injecting the patient with FDG, a form of glucose -- a favorite food of tumors -- that carries a radioactive fluorine isotope.

That isotope can be detected using a positron emission scanner. Because cancer cells burn more glucose than other tissue, the cancer cells will stand out during the scan. The test can spot cancer months earlier than a traditional X-ray.

But it comes at a cost. One dose of FDG costs about $500. The practice's PET/CT scanner cost $2 million, and the doctors pay $41,000 per month.

They recoup those costs through their billings, and Medicare is a key part of that: About 80 percent of their patients use the federal program, which he says is more than at most practices.

In 2006, Medicare paid radiologists $2,714 for the test. The next year it cut the payment to $1,027, a 60 percent reduction.

Even relatively simple tests saw reductions. Medicare's payments for a bone density scan for osteoporosis went from $133 to $79.

The reductions have ripple effects. Private insurers, for example, tend to pay a small percentage over Medicare. Cuts to the federal program drive down their payments.

"You get 105 percent of a 15 percent decrease," Erquiaga said.

The uncertain payment levels also make doctors reluctant to add staff or invest in technology, which can mean lower-quality care.

The Medicare cuts also hit doctors' bottom lines, coming as costs rise for staffing, rent, utilities and more. At Erquiaga's practice, Radiology Associates of Venice and Englewood, the property insurance went from $13,254 to $24,533 last year -- an 85 percent increase.

"What do you do, not insure your building?" Erquiaga said. "And they tell me my practice expense is going down."

That was in a year when Medicare supposedly froze a payment cut.

'Fighting for the crumbs'

Medicare sets its payments through a complicated formula mandated by law.

As Erquiaga noted, the government estimates what it costs doctors to run their offices and cover malpractice insurance -- and practice medicine.

Each estimate is adjusted by an estimate of the cost of doing business in the region.

Then the result is tweaked by a multiplier intended to pin the cost of medicine to the growth of overall prices in the economy. That led to mandated 5 percent cuts the past two years. Both times, Congress passed an exemption postponing them, creating this year's planned 10.1 percent reduction.

But physician payments still can decline, even in a supposed freeze.

By law, Medicare annually can adjust a formula component, the value of any given medical procedure. Doctors say program officials tend to reassess a particular specialty every year and that last year was the radiologists' turn.

But radiologists are hardly alone. Figures for five common procedures, including appendectomy and gall bladder removal, show that Medicare's rates rose from 2002 through 2005, then fell back to 2002 levels by this year.

Five years ago, the program paid doctors $920.16 for a para-thyroidectomy, the removal of small glands from the neck.

That rose through 2005 -- then fell back to $920.60 by 2007, almost flat with 2002 levels.

"Of course, our costs only went up 44 cents in that time," joked Michael Patete, an ear, nose and throat specialist in Venice and the medical society's president-elect.

The pattern repeats across the country.

"We're essentially operating on a fee schedule from 2001," said Edward Langston, chairman of the American Medical Association and a family practice physician from Indiana.

A Herald-Tribune analysis found that in Florida, from 2005 through 2007, Medicare cut payments for about four times as many medical procedures as it raised. Payments fell an average of $27.24 for 6,324 procedures. They rose $47.53 for 1,637 procedures.

The planned 2008 cuts are more severe. The program would cut payments an average of $60.35 in 7,845 procedures while raising them $21.78 in 512.

This region's doctors get an extra penalty. Medicare also adjusts rates based on geography, breaking Florida into three regions. One is just Miami-Dade and Monroe counties. Another consists of Broward to Indian River counties on the east and Collier and Lee on the west. The last is the rest of the state.

In effect, it says, Sarasota, Charlotte and Manatee are cheaper places to practice medicine than Lee County and no more expensive than in landlocked Central Florida counties.

Medicare says it will consider redrawing the boundaries if it sees significant support from doctors.

Erquiaga lobbied on the issue last year but found doctors divided. The geographic adjustment by definition must balance increases in one area with decrease in another, and Miami-Dade doctors, for example, are reluctant to give up their 10 percent geographic bonus.

"They have everyone fighting for the crumbs," he said.

Driving doctors out?

It all combines to make Medicare -- and Florida -- unattractive for doctors.

The Sarasota County Medical Association's poll, which drew response from one-quarter of its 550 members, corresponds to national numbers. About 60 percent of AMA members expressed similar concerns.

"They would be forced to curtail treating new Medicare patients," said Langston, the board chairman. "We know it is a big problem."

It is big enough that the AMA and the AARP -- occasionally at odds on issues -- agree that doctors need better pay from Medicare.

It is the first time in recent history they have lobbied together on an issue, Langston and AARP spokesman Drew Nannis said.

The groups are pushing Congress to redirect federal subsidies to private insurers' Medicare Advantage plans into better physician reimbursement and lower premiums for seniors.

The AMA also is pressing for two other changes. It seeks "balance billing" legislation, which would allow doctors to bill patients for the difference between what Medicare pays and the actual cost of providing treatment.

The AARP does not support that action. The doctors' association also wants to see Medicare change its formula, linking the reimbursement rate to the growth rate of medical expenses instead of the prices in the overall economy.

An economist for the Florida Medical Association, the advocacy group for the state's doctors, will travel to Washington this week to pitch the idea to Florida Sens. Bill Nelson and Mel Martinez.

Though there is no solid data, the group thinks doctors are leaving Florida largely because of Medicare reimbursement, spokeswoman Lynne Takacs said.

Erquiaga and Patete rattled off the names of three doctors who they said moved away for that reason.

"That qualified doctor can make a better living in another part of the country," Erquiaga said.

Efforts to reach those doctors were unsuccessful.

For now, doctors expect another partial respite. This week, the Senate Finance Committee is working out plans to postpone the overall 10.1 percent cut for two more years. The AMA's Langston said he fears that is just postponing a crisis.

"They keep kicking the can down the highway without fixing the real problem," he said.

Doctors know there will be more reductions in the final rule's fine print.

"The 10 percent cut will go away," Erquiaga said. "But there are other cuts in the 1,400 pages that won't go away."