The fiscal cliff deal waived a nearly 30 percent reduction in Medicare physician payments for one year. But health experts and Westside Dr. Kenneth Derrington agree, clinics may go under if real Medicare reform is not
addressed in the coming year.
The "fiscal cliff" deal cut by Congress with the passage of HR 8 creating the American Taxpayer Relief Act included stopping a nearly 30 percent cut in Medicare physician payments from Medicare's sustainable growth rate formula (SGR) and sequestration cuts.
The action may have saved one lake area clinic which was facing extreme financial hardship if the cut had gone forward — at least temporarily.
Westlake Medical Center is a community-owned independent clinic, not attached to a hospital. There are two doctors and eight employees currently working at the primary care clinic located in Laurie. Approximately 85-90 percent of patients that go there are on Medicare.
Dr. Kenneth Derrington, a long time practitioner at the clinic, was thankful the clinic's fiscal cliff was avoided, but is concerned that the Act is a short term solution that will eventually lead back to another financial crunch.
"I think it's wonderful we got some relief, but they may have just put up for another fight to deal with this," he said.
The American Medial Association estimated that, on average, the a nearly 30 percent cut would have reduced 2013 practice revenues by $31,000 per Missouri physician, potentially causing more health care access problems for Medicare patients.
The American Taxpayer Relief Act, however, only delays the 26.5 percent cut for a year and establishes no path to real reform. Current Medicare physician payment rates were extended through Dec. 31, 2013, avoiding the 26.5 percent cut required by the SGR formula for one year.
Sequestration cuts that would have been required by the 2011 Budget Control Act were deferred for two months, according to the AMA, including the 2 percent cut in Medicare payments and larger program cuts for other health programs, including research, public health programs and health professions training.
In a press statement following the passage of the American Taxpayer Relief Act, AMA President Jeremy A. Lazarus, MD, stated, "Congress averted a drastic cut of 26.5 percent from hitting physicians who care for Medicare patients on Jan. 1. This patch temporarily alleviates the problem, but Congress’ work is not complete; it has simply delayed this massive, unsustainable cut for one year. Over the next months, it must act to eliminate this ongoing problem once and for all.”
The uncertainty in Medicare is not new, and the size of the recently-avoided cut was related to the build up of bypassed cuts over the years.
Adopted in the late 1990s, the SGR formula has indicated a lowered reimbursement to physicians since 2002, but Congress has always implemented a short term fix to maintain the reimbursement rate, according to the AMA. While Medicare payments to doctors has been flat over the last decade, the AMA estimates that the cost of caring for patients has increased by 20 percent.
The financial instability from the Medicare program has lead to Medicare patients having a tougher time finding a primary care physician.
In December 2012, Missouri had just 16 practicing physicians per 1,000 Medicare beneficiaries, below the national average, according to the AMA. And about 17 percent of Missourians are Medicare patients, a proportion above the national average, the AMA states.
Nearly one in five Missouri residents is living in a primary care shortage area, and 33 percent of the state's Medicare beneficiaries are living below 150 percent of the federal poverty level. Missouri is also one of 29 states and the District of Columbia that have imposed cuts in services for the low-income elderly, such as home care and rehabilitation, according to the AMA.
The AMA is advocating reforms that would include eliminating the SGR formula and implementing a five-year period of Medicare physician payment updates that keep pace with medical practice costs.
During that time, the AMA recommends that Congress eliminate barriers and provide opportunities for doctors to transition to innovative payment and delivery models to improve care and lower costs — transitions that cannot be done now because of financial instability. Then no later than Year 6, it says that Congress should enact legislation that will promote widespread use of the reformed methods that were determined through actual practice.
The AMA proposal states, "Physician payment reform should not be another one-size-fits-all formula like the SGR. Physicians should be able to help design an array of innovations and choose those that best fit their specialty, practice, patient population, capabilities, market, partners and resources."
Instead of fee-for-service payments, the association proposes rewarding doctors for keeping patients healthy and managing chronic conditions, coordinating care and reducing duplication of services as well as reducing adverse events, avoidable hospitalizations and emergency visits.
In Laurie, Dr. Derrington says he is hopeful that such reforms will take place in 2013.
"It's what we must have," he says.
Meanwhile, Westlake Medical Center will remain open and will continue to see patients, but the clinic is not out of the woods in more ways than one.
Dr. Derrington's partnering physician, Dr. Kathleen Robbins, recently announced that she is leaving the practice, effective March 1, to work for St. Mary's Clinic in Lake Ozark due to the financial insecurity of the situation at Westlake Medical Center.
"That's a huge shock to us and a big loss of course," Dr. Derrington says.
The clinic is now recruiting for a new physician or nurse practitioner to help treat patients.
According to Dr. Derrington, the clinic's board of directors is holding an emergency meeting Thursday afternoon to discuss the issue and may plan a town hall meeting to try to get the community involved in creating a plan to figure out how to support the clinic into the future.