The high price of victory
Postponing physician fee cuts creates a bigger problem that requires bigger reaction
In July, the American Medical Association (AMA) declared "victory on Medicare physician pay"1 after Congress overrode President Bush's veto and prevented a 10.6% slashing of Medicare reimbursement to physicians in the last half of 2008 and an additional estimated 5.4% cut in 2009.
Although physician reimbursement brinksmanship has become numbingly commonplace because of a fatally flawed reimbursement algorithm, this episode was a close call. The Senate did not respond to the president's veto before adjourning for the Fourth of July recess. The cut backs were to go into effect on July 1. As a stopgap measure, fees were frozen, and the Centers for Medicare and Medicaid Services (CMS) suspended payment to physicians until the issue was resolved. On July 15, Congress mustered enough votes to override the veto when a handful of Republican senators changed their votes.
Organized medicine's "victory" resulted in postponing draconian reductions in payments to physicians for CMS. As a result, reimbursement rates will remain unchanged for the rest of 2008, and physicians will see a 1.1% increase in fees in 2009. The legislation's significance is magnified because private insurers shadow the CMS fee structure in determining their reimbursement rates.
Influence of money
If money is the lifeblood of politics, what did this fix cost? Money spent on lobbying is measured, not in terms of years, but election cycles. 2008 is an election cycle, as was 2006, 2004, and so on. In the most recent three election cycles, the total expenditure of the AMA's Political Action Committee (PAC) was $8.4 million, and that amount may increase significantly as the November election draws nearer. The AMA's donation of $25 million ranks 13th in terms of political contributions between 1989 and 2008 (trial lawyers rank fifth). The American Academy of Ophthalmology's (AAO) OPHTHPAC has spent more than $8.5 million over the same time and ranks 84th. In two of the last three election cycles, the American Optometric Association's (AOA) PAC outspent OPHTHPAC. But each organization has been outspent by a margin of 2:1 by the National Beer Wholesalers Association during the current cycle.
Ophthalmology has not fared well over the last 2 decades. One need only consider the payment for a single procedure—cataract extraction, CPT code 66984—to understand why ophthalmologists' incomes have fallen precipitously according to the Medical Economics annual survey.2 As Medicare reimbursement differs by geographic region, let us assume that the median reimbursement for cataract surgery was $1,800 in 1989 and $850 in 2008, a decrease of $950. But that scenario doesn't take into consideration the effect of inflation.
According to the Bureau of Labor Statistic's Consumer Price Index, today's reimbursement of $850 in 2008 would be worth only $457 in 1989 dollars. The inflation-adjusted decrease is approximately $1,350 per cataract surgery. Thus, a cataract surgeon who performed four cataracts per week (and provided 90 days of follow-up care) in 1989 and again in 2008 saw a $270,000 difference in compensation for his or her work. Meanwhile, the overall consumer price index increased 89%. If it seems harder to make a living in ophthalmology than it once was, the reason lies herein.