August 15, 2012
By Kathryn Nix
The Association of American Medical Colleges projects a shortage of 63,000 physicians within the next few years. But rather than encourage doctors to continue practicing medicine, President Obama's health law will do exactly the opposite.
While the bill was being debated, the American Medical Association advocated two big policy changes. First, it asked that Congress overhaul the arbitrary formula used to annually update Medicare's reimbursement rates. The current formula invariably calls for massive cuts in payments. And Congress invariably overrides the cuts for fear that it would force thousands of physicians to stop accepting its enrollees, thereby making it difficult for seniors to access medical care.
The second change sought by the AMA: medical liability reform.
The docs got neither in Obamacare, even though both reforms would benefit patients, too. Fixing Medicare's flawed payment formula would protect enrollees' access to their doctors, and medical-malpractice reform would reduce health-care costs.
Instead, the authors of the health law left the payment formula untouched. Now, physicians face a 27 percent pay cut for treating Medicare patients, unless Congress acts. And lawmakers did little more than sneeze at the idea of medical liability. While that's generally a state issue, Congress could have at least provided some encouragement.
It gets worse. In addition to leaving the Bizarro-world formula in place, Obamacare introduced even more cuts to physician payment.
The little-mentioned physician value-based payment modifier introduced to Medicare under the law could have huge consequences for patient care. For a while now, Medicare has offered physicians financial incentives to report performance on certain quality measures. In 2015, they'll be paid differently based on a government assessment of their performance.
This is problematic for several reasons. The payment modifier is budget neutral, which, according to the final rule, "means that payments will increase for some physicians but decrease for others." This system will pay physicians based on how they stack up against other physicians — not the absolute quality of care they provide. Think of it as grading on a curve: a practice that can deny A's to deserving students if "too many" others do even better. Under this system, even if every physician achieved excellent quality of care, some would by necessity receive a pay cut; on top of the looming cuts in the payment formula.
Doctors have good reason to be worried. Studies have shown that rigid pay-for-performance models like this one can destroy the doctor-patient relationship by punishing physicians for patient outcomes that are often beyond their control. There's also the chance that quality measures become outdated and fail to represent best practices. And of course, there are patients for whom the course of action indicated by quality measures won't be the most appropriate.
This is just the tip of the iceberg. Obamacare sets up the Independent Payment Advisory Board, or IPAB, to keep Medicare's cost within a defined budget target. One of the few ways explicitly available to IPAB to contain costs is to further cut physician payment rates.
Obamacare also adds 17 million Americans to Medicaid, another program that often pays physicians less than the cost of providing their services, making it difficult for them to accept more enrollees. Adding more people to the program will put additional strain on state budgets, putting further pressure on already-low reimbursement rates.
With this to look forward to, it's no wonder that survey after survey show most physicians hold negative attitudes toward the future of medicine under Obamacare.
I myself am starting medical school. It is my hope that, when the day comes that I am caring for my own patients, government policies will not get in the way of offering high-quality care to all who need it. For that to come to fruition, Congress will first need to nix Obamacare.
Kathryn Nix is a policy analyst in The Heritage Foundation's Center for Health Policy Studies.
First appeared in Orlando Sentinel.
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