The Ambitious and the Contentious

The Physician Perspective

The debate over Medicare cuts is heating up. Recently, the president announced his budget cuts of nearly $70 billion for Medicare spending over the next 5 years. The impetus comes from the notion that current Medicare spending is unsustainable. For those who are ardent supporters of this reform this thing was long overdue.According to the Economic and Budget Issue Brief, Part B of Medicare would cost the taxpayers about $158 billion in the year 2006. Out of this about 38% goes to payments for physician services. This makes physician payments a natural target for cost reduction strategies. According to the same Congressional Budget Office (CBO) report if current measures are undertaken then physicians would see a decline in payments anywhere from 25 to 30% over the next several years.However, it is a well known fact especially among the medical community that whenever cost cutting measures have been implemented in the past physicians have offset that with a higher volume of patients that they see and higher acuity of cases (RVUs). The CBO is also cognizant of this fact and they project that even a 25-30% reduction in payments will be offset by higher volume and intensity of services provided. Therefore they claim that the net effect would be a slower rate of growth at about 1-2%. One counter argument to this claim is the fact that physicians especially primary care providers are already stretched to the limit in terms of volume. It is hard to say how much more volume increase physician practices are going to be able to sustain. An easier way to get around the problem and a thing that we will probably see more of in the coming years would be decreased enrollment of Medicare patients by health care providers in favor of better health insurance. However, it remains to be seen how exactly this plays out.

You can view the entry at the HealthVoices Blog as well. Related Link: Read a related article at the NYT.