PROPONENTS OF THE PATIENT PROTECTION AND AFfordable Care Act (usually referred to as the Affordable Care Act), which aims to cover some 32 million uninsured individuals, would do well to ask whether physicians will care for these individuals once the act is implemented. Most physicians provide care for some uninsured or poorly insured patients, relying on payments from insured patients to cover the shortfall; private practice physicians are the main source of care for the uninsured and poor. But recently physicians have become less likely to provide such care “because their practices are being squeezed by steadily declining insurance reimbursement on the one hand and sharply rising operating costs on the other. These pressures make it increasingly difficult to see patients who cannot afford to pay—or, in the case of Medicaid, patients for whom payment rates are often inadequate.” The Affordable Care Act will not alleviate these pressures and may make them worse. The law includes provisions and decreases in payment that will undermine physicians’ ability to care for both the newly insured and patients who already have insurance. Under the act, it is estimated that half the currently uninsured individuals will be covered under Medicaid by expanding eligibility guidelines. The federal government has committed to cover the cost of these newly enrolled Medicaid patients for a specified period (100% of costs in 2014-2016; smaller amounts thereafter). However, states are already struggling under huge budget deficits resulting from their existing Medicaid programs. States’ costs will increase further on July 1, 2011, when federal stimulus aid disappears and each state’s share of Medicaid costs increases by one-fourth to one-third. Because states are required to maintain eligibility guidelines to keep federal funding, their only options for deficit reduction are cutting already low Medicaid reimbursements and limiting the breadth of coverage. In 2010, thirty-nine states decreased Medicaid payments to physicians, hospitals, and nursing homes, and many states are planning future reductions of as much as 10%. Expanded insurance coverage will succeed only if it offers adequate reimbursement rates to physicians to take on the newly insured patients. Physicians are already reluctant to accept Medicaid reimbursement, which is a fraction of what other insurances pay. Hospitals are having financial difficulties with current Medicaid reimbursements; lower rates and hospital closings are inevitable. Although the Affordable Care Act plans to increase Medicaid reimbursement rates for primary care physicians to Medicare rates for 2013-2014, that will be little help to patients in need of specialty care where rates will be cut and impending Medicare cuts will discourage many physicians from seeing these patients. More than half of the nearly trillion dollar price tag for expanding coverage under the Affordable Care Act will be paid by decreasing spending for the more than 46.3 million individuals covered by Medicare. The biggest decrease comes from reduced payments to clinicians and health care institutions. For example, the Affordable Care Act assumes that a planned 30% reduction in physician fees scheduled to occur under the Medicare sustainable growth rate (SGR) formula over the next 3 years will occur. Rather than fix a flawed SGR formula, Congress over the past 8 years has repeatedly delayed scheduled SGR decreases. Athough an SGR fix was in the original House bill (HR 3200), which organized medicine supported, the final Affordable Care Act that Congress passed left the SGR formula intact. In the latest deferral, Congress delayed for 1 year cuts scheduled for December 1, 2010, and for January 1, 2011, totaling 25%. Medicare reimbursement rate cuts of 29.5% are scheduled for January 1, 2012. These will affect elderly individuals and persons with disabilities covered under Medicare and military families whose TRICARE coverage is based on Medicare rates. In addition, starting in 2011, the Affordable Care Act plans lower payment rate updates to most categories of Medicare providers to reflect the increase in productivity experienced in the economy overall. Because medical services are labor-intensive, health care institutions and clinicians have been unable to improve their productivity to the same extent as the overall economy. The 2010 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (the Medicare Trustees) anticipates that Medicare productivitybased payment-rate updates will increase 1.1% more slowly
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Dec 1, 2011
Logan Lewis 
Open Access
