Confessions of a Pediatric Management Consultant... Where fame and fortune await those who help keep pediatric practices alive and independent!

Bad News Update from Medicare (RVU 2008)

Written by Chip Hart | Dec 6, 2007 1:47:25 PM

Received this from a chain of interested parties (AMA -> AAP -> little ol' me) regarding the status of the 10% cut presently scheduled for Medicare:

...attached for your information is a letter that HHS Secretary Leavitt sent to Chairman Baucus on Monday regarding the Senate Finance Medicare package. It states that any legislation to avert the 10% cut should be funded by cuts to other fee-for-service providers and that the President's advisors will recommend a veto of any bill that makes cuts to the Medicare Advantage program.

Congressional Quarterly reported on Chairman Baucus' reaction to the letter as follows: "Upon hearing the White House demands, a visibly annoyed Sen. Max Baucus, D-Mont., tore into them. 'He knows there'll be some MA cuts,' Baucus said, using the abbreviation for Medicare Advantage. 'He knows that, he knows that. He knows there'll be MA cuts. He knows there's no Medicare bill if there's no MA cuts. He knows there's no doctor fix if there's no MA cuts. He knows that.'

The letter makes a situation that was already bad even worse. It is not surprising that the Administration has taken this position, however, as it has not taken any of the many steps recommended by medicine to help lessen or avert the imminent cuts. In fact, the Administration deepened the cuts for many physicians through its decision to apply the 5-year review budget neutrality adjustment to the work relative values instead of the conversion factor. This budget neutrality adjustment will lead to an additional pay cut of about 1% in 2008 on top of the 10% cut in the conversion factor and the cuts to due expiring rural provisions.

Summary: for the past couple of years, we've been told not to worry too much about the predicted 10% cuts to the Medicare multiplier. This year, with the budget neutrality cuts still in place (ironic, if you think about it) and the ~1.1% cuts from GPCI, the implication was that the 10% cut would be removed shortly.

Well, it's time to worry.

Meanwhile, Mr. Leavitt has a fairly active blog. In his most recent entry, he explains his position above pretty clearly, summarized here:

When rates per procedure don’t go up, doctors have simply done more procedures.

Personally, I find his oversimplification of an important issue (completely with bogus folksy references to keep the small minds happy) and the demonization of the physicians to be offensive. I can't even begin to react properly to it. However, there are some really good comments in his blog and I found this link which could take me days to go through.