“At some point, a financial reckoning has to occur,” Rep. Michael C. Burgess, MD (R-Texas) told AAOS members at the National Orthopaedic Leadership Conference (NOLC). “And when that happens, there’s going to be you-know-what to pay.”

Rep. Burgess, now serving a third term in the U.S. House of Representatives, has also been a physician of obstetrics and gynecology for more than 21 years. His two careers give him a unique perspective on the continuing problems with the Medicare sustainable growth rate (SGR) formula and efforts to repair the situation.

“Every time we [Congress] come in at the last minute and say, ‘we’ve saved the doctors,’ and we give them a half-percent uptick or something on reimbursement, the reality is that we’re robbing Peter to pay Paul,” he explained.

Dr. Burgess said that initiatives designed to increase efficiency—such as the move toward electronic prescribing—may help, but are not the panacea that some supporters make them out to be.

“It’s a misapplication of a good idea,” he said. “I’ve tried e-prescribing in my office. It’s sometimes difficult, and the learning curve has to be addressed. It slows you down and adds 1 or 2 minutes to every patient encounter. I don’t know about orthopaedics, but if you’re not seeing 30 or 40 patients a day in an ob-gyn practice, you’re probably not even taking money home at the end of the week. If you add 2 minutes to every patient in a 30-patient day, you’ve added an hour. Who’s going to pay for that time? No one seems to be interested in addressing that question.”

Addressing the SGR
What both physicians and members of Congress are interested in addressing is the question of “fixing” the SGR. Dr. Burgess supports using the Medicare Economic Index (MEI) instead of the SGR to determine physician reimbursement under Medicare, a position also supported by the AAOS. The current MEI is a fairly accurate measure of the true costs of providing physician services to Medicare beneficiaries and is used as a basis for determining reimbursement to other providers, such as hospitals and skilled nursing facilities.

The MEI, said Dr. Burgess would cover cost of living increases, and allow physicians to “be able to keep their doors open and not borrow from their retirement funds for operational expenses.”

Before any change could be made, however, the problems with the SGR formula need to be addressed. If Congress simply continues on the current path, adjusting the mandated SGR pay cuts every time they are about to be implemented, the result is a growing budget deficit. According to Dr. Burgess, that deficit has risen from about $118 billion when he took office in 2003 to nearly $300 billion today.

At some point, however, a financial reckoning will be required to repay that deficit. Based on data in the 2008 Medicare Trustees Report, Dr. Burgess believes that year would probably be 2017 or 2018—just before projections say the Medicare system will run out of money.

Simply accepting the SGR cuts, and letting the system work in the manner it was intended, is not a feasible option.

Noting that not many physicians would continue to see Medicare patients if the planned cuts go into effect in July, followed by another 5 percent reduction on January 1, 2009, Dr. Burgess asked “How low can payments go before physicians would, of necessity, have to stop participating in the program?”

The ideal approach, he says, might be to write off the money owed to Medicare as lost and start over using a clean slate. However, he believes that such a plan would be unlikely to gain broad enough support in Congress to pass.

“It’s money that’s already been spent,” he explained. “It’s not in the Treasury earning interest somewhere. It’s just a bookkeeping maneuver to add it to the deficit and say it’s a charge-off.”

A search for middle ground
The middle ground, according to Dr. Burgess, belongs to a bill he introduced during the last session of Congress and again this year. Under that bill, the SGR formula would be repealed in 2 years’ time. During that time, any savings that occurred in Medicare would be held and used to offset the money owed under the SGR. Such savings, he says, already exist but, due to the accounting model, are credited to hospitals instead of physicians.

That’s problematic, he believes, because physicians are often the source of the savings. He noted that the original date of Medicare’s insolvency had been predicted as 2018, but last year’s Medicare Trustees Report moved that date back to 2019.

“Why did we get a year’s reprieve? Because you [physicians] are doing things better … You’re doing surgery in ambulatory surgery centers; you’re doing procedures in your office; you’re keeping patients out of the hospital. When you do that, the money comes out of Part B. But the savings, obviously, are on the hospital side, in Part A. … If you’re doing things better in Part B, Part A is the beneficiary, and Part B is completely insulated from any benefit.”

But what would happen to physician reimbursement during the 2 years between enactment of the Burgess bill and the repeal of the SGR? Dr. Burgess suggests that physicians could be protected by resetting the SGR baseline, something that is done “from time-to-time with the SGR when the pain just gets too intense.”

“By resetting the baseline,” he said, “we actually get a little bit of an uptick for the next 2 years. The first year is a little bit better than the MEI would be—about 1.8 percent. The next year, because of the effects of the SGR, it wouldn’t be quite as good, but still in excess of 1 percent, and better than we are doing today with these last-minute fixes.”

A transformational time
Dr. Burgess closed with some words of inspiration and advice for the physicians in attendance as well as the AAOS membership at large.

“We are in a transformational time in the science of medicine,” he said. “Whether Congress encourages it or not, it’s happening. What we have to be focused on in Congress is how [not to] derail that. It’s difficult, because while you’re transformational, Capitol Hill is transactional. … We move things around. For Congress to focus on the transformational, it needs an injection of intellect and enthusiasm from groups like [the AAOS], which is why I’m so glad you’re here in Washington today, and why I’m so glad you’re participating in the process.

“And let me just remind you—it doesn’t end when you get on the plane to leave Washington, D.C. Continue this when you get home. Work in your district. Senators are home for a full month in August. Start now, get on the schedule for August, talk about the progress that has been made or not made on the SGR. What did we do at the end of June? Did we grant an 18-month or a 6-month extension? Be prepared to talk about these things in very concrete terms to your representative and your senators.

“I took an oath when I became a physician,” he concluded. “I also took a Constitutional oath when I ran for Congress. It’s a happy day for me when those two oaths intersect.”

Peter Pollack is a staff writer for AAOS Now. He can be reached at ppollack@aaos.org