Addendum: “Why You Can Not Find a Doctor to Accept Medicare”

Center for Medicare ServicesOn April 14, 2015 the Senate, having returned from a recess, voted to repeal the SGR initiative thus halting a proposed 21% minimum payment reduction to health care providers (physicians). Under the new legislation sent to President Obama for approval, doctors will receive between a 0.5% to 1% annual increase in reimbursement through 2019. The measure proposes alternative pay structures which are designed to reduce overall health care costs and rate of health care cost growth. They involve paying one large entity which would then dole out pre-negotiated payments to its members delivering the services.

The American Medical Association as well as specialty medical and health groups are hailing this as a major victory for doctors and patients. I see it a bit differently.

Since 1977 the Congress of the United States has held practitioners at loaded gun point always threatening to reduce physician reimbursement without reducing physician costs or bureaucratic burdens in the least. Generations of policy advisors and elected officials have created a level of mistrust and uncertainty between themselves and providers while always painting the health care delivery teams as greedy money craving individuals more interested in their personal gain than the health of their patients. The result is that for years doctors have left the Medicare system and or retired early.

The current annual increase of up to one percent is accompanied by additional bureaucratic requirements having little or nothing to do with the doctor patient relationship. One percent will not keep up with the cost of inflation or the additional costs involved to meet the bureaucratic new requirements of CMS and policy wonks.

To hail this as a victory is like trying to sell Custer’s last stand at the Little Big Horn as a victory for the US Cavalry. The net result will be the destruction of small private practices, the growth of concierge medicine and the growth of enormous conveyor built corporate medical groups where patients are a product not a human individual.

Why You Can Not Find a Physician Who Accepts Medicare

CMSSGR (sustained growth rate) is a policy and law put in place by the U.S. Congress signed into law four Presidential administrations ago and kept in place year after year by our non-creative elected Federal officials. It was designed to keep the costs of health care growth down by reducing payments to providers if they exceeded the health spending budget for the previous fiscal year. The problem is that health care spending has climbed continuously and it has never stayed within the budgetary guidelines legislated by Congress.

After the first year of the law the General Accounting Office noted an 8% increase in health care spending above the budgeted amount. Congress was supposed to reduce health care payments to providers by 8% the next year, but the providers howled about an 8% reduction and the President and the Congress backed down. Instead of a reduction they gave providers a cost of living increase. The GAO showed that the increased spending was not due to physician pay increases or physician generated costs but due to increased usage and expense in areas outside provider control. Every subsequent year since the SGR became law, the Congress has backed down and granted a miniscule increase instead. The difference between what was budgeted and what was actually spent has accumulated from year to year and each subsequent Presidential administration and U.S. Congress has been reluctant to correct the SGR because the monetary difference would appear on their administration’s balance sheet and legacy. That continued until the Affordable Health Care Act (Obama Care) passed and signed into law before anyone who voted on it actually read it, made correcting the SGR part of the law.

On January 1, 2013 the SGR was due to be repealed by Congress and health care providers were due to receive an 18%- 45% reduction in fees for services. Congress kicked the can down the block until January 1, 2014 and again until December 31, 2014 when Obama Care made the reduction mandatory. The last Congress kicked the issue down the road until April 15, 2015. They were supposed to settle the issue before their spring recess but they adjourned for the spring recess with promises of passing new legislation upon their return on Monday April 13, 2015. That was yesterday when Conservative Republicans announced that after two weeks of consideration they had major problems with provisions of the legislation they had agreed to pass before their spring recess. Their delay will go beyond April 15th.

The Centers for Medicare Services or CMS decided simply to not process any bills or make any payments to health care providers until Congress makes up its mind. Since April 1st they have paid no one except themselves. If no legislation is agreed upon by midnight tonight, CMS will begin processing payments to providers retroactively to April 1, 2015 with a minimum 21% reduction in fees compared to the 2014 payment rates. Physicians are reacting just as expected. Many have decided to no longer see Medicare patients. Those that do see Medicare patients will require payment for services by cash or credit card at the time of service with payments up to 115% of the 2014 Medicare allowable rate for that service. Many will leave the Medicare system entirely.

Our office will continue to see Medicare patients at the current time under the existing payment systems and we will give this Congress an opportunity to fix the problem. When we refer you to specialty physicians we have no way of knowing who will be seeing Medicare patients and who will not. We suggest you ask that particular office before your planned visit so there are no surprises at the check in check out window.

Generic Drugs- Small Government and Less Regulation Lead to Lack of a Safety Net in Production

Years ago under pressure from consumer groups, Congress dramatically reduced the time a drug manufacturer could retain a patent on a brand drug.  The patent was reduced from 21 years from release of the product after FDA approval to 7 years from the time development begins. The extremely short window of opportunity to research and develop new medications led to extraordinarily high prices for the new medications. The law met its intended result of encouraging the rise of copy cat less expensive generic drugs.

At the same time under the Reagan Administration, the Food and Drug Administration closed its research and evaluation labs for testing new pharmaceutical products before they can be released to the American public. Under the new laws, pharmaceutical manufacturers now can contract with outside labs to test their products and the reports are then submitted to the FDA for review and approval.  No longer did a drug company have to submit its actual product to the FDA for their independent testing and approval or denial.

The results of these two pieces of government de-regulation was the rise of generic pharmaceutical manufacturing plants in remote regions of China , India and Asia with the most reliable and technologically advanced plants in Israel. Generics needed to prove to the FDA that they possessed 85% of the bioavailability of the brand product in reports generated by contracted labs and sent to the FDA for the products approval.

For years I suggested to my patients that if they could afford the brand name they were best served paying the higher price to obtain a product they knew was produced locally with relatively high standards.  The NY Times on Saturday August 13, 2011 ran a front page article noting that over 80% of generic products are produced in “shadowy” foreign factories that have never ever been inspected.  Several years ago 81 individuals perished because Chinese manufacturers substituted cheaper and tainted products in the making of the anti coagulant heparin. Counterfeit packaging and products originating with the Russian mob proliferate throughout the world market and are difficult for experts to distinguish from the real thing.

It appears that the Obama administration has finally reached an agreement with the generic drug industry for the industry to pay for government inspection of their facilities every few years. The legislation may pass through Congress this fall.

My suggestion to my patients remains the same. If you can afford the brand product purchase it. Know where your pills come from. Demand that your Congressional elected official works to fund the FDA so it can reopen its research and evaluation lab and be the independent agent determining the safety and efficacy of the drugs we are prescribed. Consider extending the length of a patent on new products in exchange for lower pricing on brand name drugs. It’s time to stop allowing only market forces to be watching out for the safety of our medications. That’s like asking the fox to watch the hen house.