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Reductions in physician reimbursement under Medicare have resulted in substantial breast beating by the medical establishment, but little appreciation from the public or the patient advocacy community. This failure to resonate with the government and public has surprised and bruised the collective ego of physicians. Therefore, it is clear that the resolution of the problem will require more physician effort and more public support. Understanding the structure in which this issue revolves may help clarify its complexity.

The Medicare program was designed in the 1960s to address the acute health care needs of the nation's elderly and disabled. Substantial changes have occurred since Medicare's inception, particularly, changing its focus from acute interventions for illnesses of limited duration, to long-term management of chronic illness. But the reimbursement schedule has not changed to reflect this new paradigm, which includes the more complex evaluations and monitoring of patients required for optimum care.


To make matters worse, this past January, Medicare cut payments to physicians by 5.4 percent. This is to be followed by additional cuts of 5.7 percent in 2003 and another 5.7 percent in 2004 – amounting to a total of 16.8 percent over three years. This represents the forth cut in Medicare reimbursement in the last 11 years.

Since 1991, Medicare payments have averaged only an 1.1 percent increase annually – 13 percent less than the annual increase in the cost of practicing medicine, according to data compiled by the American Medical Association (AMA).

In general, reductions in physician reimbursement are not greeted with much concern in Congress. Neurologists have long been at the low end of the bell-shaped curve in terms of income, but most physicians continue to earn more annually than their Congressmen do and certainly more than their patients do. And that makes our case more difficult to gain allies.

Physicians are seen as wealthy. There is a perception in Congress and in the public mind that our primary concerns are our pocketbooks. When couched in terms of physician income, the cuts do not appear to have significant consequences. But we know they do. The cuts exacerbate our ever-increasing practice costs – setting off beleaguered feelings among physicians. But, more important, dwindling reimbursements result in a serious problem of access for Medicare beneficiaries.


A survey of physicians by the AMA has found that one-third of physicians have stopped – or intend to stop – seeing Medicare patients. One out of three Medicare patients must wait more than one week to see a doctor. When searching for internists or family practice physicians in the Portland, Oregon-metropolitan area, we found that 60 percent of them are no longer taking any new Medicare patients.

The Mayo Clinic has estimated that as the proportion of its patient population on Medicare increases from 40 percent to 42 percent, increases in charges to non-Medicare patients will need to rise by 24 percent just to maintain current operating margins, and these margins are only 2.7 percent. Physicians are already cutting back on their volume of Medicare patients, and there is no indication that the problem is going to get better.

The unfortunate truth is that Medicare, once the “gold standard” for provision of health services, has become progressively underfunded. If the current cuts persist, reimbursements in 2004 will be less than they were in 1991. As a colleague quipped recently, “If you are losing money on every patient you can't make it up in volume.” So why don't Congress and the public see this as a problem?


The intimacy associated with physician-patient relationships minimizes fiscal issues. Patients are rarely turned away, and when they are, there is a sense of public outrage. This has resulted in an expectation that medical services are a social “right” and that cost is not a factor.

Most physician practices operate like small service businesses, and, as such, they are unable to take advantage of economies-of-scale or to ramp up or throttle back on production in response to demand. Physicians must always be prepared to deal with patient problems – not simply from nine to five but 24–7.


Dr. Mark S. Yerby, MD

This readiness has costs that are not reimbursable. Unlike our legal colleagues, we cannot charge for telephone consultations for our patients and their families – reviewing records or reports or scheduling studies – unless we see them in person.

Where there is a true face-to-face interaction, it is more difficult to “just say no.” The costs of running a practice are difficult to control. Additional expectations are continuous. New privacy regulations, new charting guidelines, increased staff salaries, and increases in malpractice insurance must simply be absorbed.


In this atmosphere, physicians have become resentful. They are unable to say no to the patients they already care for, but they can cut their losses by not adding those with low reimbursement – a category that now includes Medicare recipients. Physicians who near retirement often find it better to do so earlier than planned. Physicians-in-training seek specialties where direct patient care is minimized. The result is a slowly shrinking pool of clinicians, and a loss of those with the greatest experience – and progressively less access by patients.

There are proposed remedies to the current series of cuts. They are now only proposals. Some are linked to other legislation, such as prescription drug benefits. Others are free standing. All will require bipartisan and bicameral action. At best, they provide a two percent increase annually for the next three years. This will barely reverse the current 5.4 percent reduction by 2006. There is no plan for improvements beyond this date. In this election year, Congress wants to adjourn early; thus there is little time for a legislative solution.


What can we do? As neurologists, we have called upon our patient partners from the Brain Advocacy Coalition for support. They have been strangely silent. They apparently view this as a physician issue, failing to see how their constituents' access will be adversely affected. We have to work with them to gain their assistance, especially on the issue of access. We must be more proactive about the issue of access; we must take the lead.

As AAN members, you can participate in shaping this policy. A section of the AAN Web site is dedicated to federal affairs. Click on it to read a brief summary of this problem and link to a section that allows AAN members to e-mail a “form letter” – or compose a more personal note – directly to your congressman. E-mail is now the primary means for communication to members of Congress. Since the anthrax incidents, their mail is irradiated and letters take weeks to arrive.

One notice about the Medicare reimbursement issue was e-mailed to 9,000 neurologists. If 9,000 e-mails arrived at Congress requesting a fix of the Medicare physician reimbursement cuts, they would listen. This is also an election year. If we all make it a point to ask the candidates for their position, it will resonate.

We need neurologists to stand up and demand action on behalf of their practices and, more important, their patients. Do not allow Medicare reimbursement to be framed simply as an issue of physician income. This is an issue that requires the participation of all members of the AAN – not simply its Legislative Affairs Committee.

In the final analysis, it is about patient care and access – which is why we became physicians and neurologists in the first place.