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UCD Study Says Low Medicare Payments Contribute to National Provider Shortage

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Source:  Medicare Report: News Archive > 2010 > 11/19/2010 > Legislative News > Physician Payment: UCD Study Says Low
Medicare Payments Contribute to National Provider Shortage

21 MCR 1350
Physician Payment
UCD Study Says Low Medicare Payments
Contribute to National Provider Shortage
SACRAMENTO, Calif.—At the heart of the U.S. dearth of primary care physicians is the low physician reimbursement rate the
federal government pays to Medicare providers for services to the nation's elderly and disabled, a University of California health
economist told BNA Nov. 11.
The reimbursement rate to Medicare's generalist providers has created an inequitable pay structure for doctors that has reduced
medical students' pursuit of careers in primary care, J. Paul Leigh, professor at the University of California at Davis Department of
Public Health, said.
Saying Medicare “has everything to do with” the shrinking primary-care physician (PCP) workforce, Leigh called for a restructuring
of how the publicly funded single-payer health care system compensates generalist medical providers. He said Medicare's low
reimbursement rates influence similar inadequate PCP payments by state-run federally funded Medicaid programs for the poor.
The Medicare fee schedule, set to decrease 23.6 percent Dec. 1, also influences how much health insurance companies will pay for
their subscribers' medical services, Leigh said. Provider rates, he said, are “not established by free markets” but by the Centers for
Medicare & Medicaid Services. Another cut of 6.5 percent under Medicare Part B is scheduled for Jan. 1, 2011, according to a
CMS payment rule issued Nov. 2 and set for Nov. 29 Federal Register publication.
“After Medicare sets rates, insurance companies and Medicaid follow,” Leigh said. He is affiliated with the U.C. Davis Center for
Healthcare Policy and Research.
Bridging Earnings Gap
Leigh said, to bridge the gap in earnings, CMS should freeze Medicare specialty rates and allow primary-care rates their usual rate
increases for the next five years.
“Medicare has the legal power to do this and insurers and Medicaid would likely follow Medicare's lead,” Leigh told BNA.
Nationally, Medicaid physician payments average 66 percent of Medicare payments for primary-care services. California's Medicaid
program, known as Medi-Cal, for instance, pays providers about 51 percent of Medicare provider rates, a recent California Budget
Project showed.
Low PCP reimbursement rates paid by Medicare and Medicaid fuel the wide disparity in wages between primary care doctors and
specialist physicians, according to Leigh, lead author of a recent national study of physician earnings.
The Leigh study on physician wages across specialties, published in the Oct. 25 issue of the Archives of Internal Medicine, found that
medical specialists are paid up to 52 percent more than primary-care providers, also called generalists (Arch Intern Med. 2010 Oct
25;170(19):1728-34).
Leigh said the study's findings are a clarion call for equalizing doctors' pay, as the federal and state governments implement the U.S.
health care overhaul outlined in the Patient Protection and Affordable Care Act.
To boost the ranks of primary care doctors participating in state-run Medicaid programs, PPACA, in 2013 and 2014, requires states
to pay their Medicaid providers for primary care services at or above Medicare rates.
“While this is a good start, it is not enough,” California Medical Association (CMA) immediate past president Dr. Dev GnanaDev, a
surgeon and medical director at Arrowhead Regional Medical Center in Southern California, said in a statement. “Family practice
physicians, who already earn far less than specialists, are harmed even more by low Medi-Cal rates.”
Accepting New Patients
The California HealthCare Foundation or CHCF, based in Oakland, funded a 2008 University of California at San Francisco study
showing that 90 percent of medical practices in the state accepted new patients, but only 73 percent accepted new Medicare
patients, and 57 percent accepted new Medi-Cal patients.
And a recent Medical Group Management Association survey of 2,860 medical practices found that 67 percent of physician groups
would either limit their acceptance of new Medicare patients or no longer seeing Medicare patients.
The survey, conducted by the Englewood, Colo.-based organization from mid-September to mid-October, found that more than 45
percent of practice-respondents said decreased reimbursements would delay their medical group's purchase of an electronic health
record (EHR) system.
Beginning in January 2011, physicians can apply for a Medicare incentive program that pays doctors who implement, in their medical
practice, health information technologies (HIT), such as EHR and practice-management systems.
Offering a long-term physician payment fix, the cochairmen of the bipartisan National Commission on Fiscal Responsibility and
Reform (NCFRR) Nov. 10 released a budget-reform plan that would jettison the SGR formula and replace it with unspecified
reimbursement-rate reductions through 2015 (see related item in this section).
Drafted by former U.S. Sen. Alan Simpson (R-Wyo.) and Erskine Bowles, a Democrat and former White House chief of staff to
President Clinton, the plan calls for CMS to establish a new Medicare payment system to begin 2015.
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By                 Chris Rizo
An abstract of the UCD study is available at http://www.ncbi.nlm.nih.gov/pubmed/20975019.
The NCFRR proposal is available at http://www.fiscalcommission.gov/news/cochairs-proposal.



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Description: From the BNA Medicare Report 11/19/2010: SACRAMENTO, Calif.—At the heart of the U.S. dearth of primary care physicians is the low physician reimbursement rate the federal government pays to Medicare providers for services to the nation's elderly and disabled, a University of California health economist told BNA Nov. 11.