Alaska Medicare Environment Highlights Payment Crisis

A revolution, of sorts, may be brewing in Alaska. In a state that already grapples with a serious primary care physician shortage, many doctors are declining new Medicare patients. Some are dropping Medicare participation altogether or are discontinuing current patients when they turn 65.

"We have a Medicare crisis here," said Marilyn Dodd, executive director of the Alaska AFP. "People cannot find a doctor in Anchorage if they have Medicare."

An early 2006 survey by the AMA indicated Medicare pay cuts scheduled for 2007 would force 45 percent of respondents to decrease or stop seeing new Medicare patients. A 2006 survey by the AAFP found that 56 percent of respondents would continue seeing current Medicare patients but would stop accepting new Medicare patients if pay cuts occurred. Congress averted those cuts with a stopgap measure, but the current formula that determines Medicare physician payments calls for an 8 percent to 10 percent reduction in 2008.

Many Alaska physicians have testified to the state legislature that Medicare pays less than 50 percent of what it costs to treat their patients. Although the gap recently has been narrowing, the state's cost of living index historically has been significantly higher than those seen in the lower 48 states. Generally, Alaska residents must earn 10 to 30 percent more to maintain the same lifestyle as their counterparts in cities in the contiguous United States.

To help ensure the financial viability of Alaska physicians, Congress in 2000 approved a Federal Medical Assistance Program, or FMAP, that added 4 percent to physician payment. In 2006, that additional assistance ended.

"Now the rates are so low that some clinics are closing," said Dodd. "If your doctor retires, you won't have a doctor. You can't get a doctor if you're over 65."

Physicians lay the blame squarely on Medicare's low payment. Paul Davis, M.D., of Anchorage, president of the Alaska AFP and chair of family medicine at Providence Alaska Medical Center, said Medicare pays "33 percent on the dollar in Alaska, and our overhead runs at least 65 cents on the dollar just to run an office up here."

If they are to stay in business, Alaska's physicians must limit the number of patients whose care costs more than Medicare pays, he added.

The Alaska Family Medicine Residency program "is only one of two clinics in town still accepting new Medicare patients, and many practices are actively turning patients away when they reach 65," Davis said in correspondence to Kenneth Fink, M.D., M.P.H., chief medical officer for Region 10 of CMS, which includes Alaska. "Even we had to 'limit' the number of new Medicare patients because we have an educational imperative to train our physicians to care for patients 'cradle to grave,' and (our practice was) already at 45 to 50 percent Medicare (patients).

"The situation is even more dire in the bush in Alaska, as it is virtually unconscionable to turn any patients away in small communities," said Davis.

Those concerns prompted the Alaska Senate to pass a resolution calling on HHS and Congress to "rewrite the formulas used to develop Medicare reimbursement rates for Alaska" and to "rewrite the Medicare reimbursement system for the entire nation to address inequities in physician reimbursement that are leading to the collapse of the primary care system and limiting senior citizens' access to the physicians best qualified to coordinate their care." The resolution is now before the Alaska House of Representatives.

The Alaska situation also spurred U.S. Sen. Lisa Murkowski, R-Alaska, to introduce the Rural Physicians Relief Act of 2007, or S. 290. (At the THOMAS Web site, type "S. 290" in the search box after selecting "Bill Number.") The bill would give primary care physicians a $1,000 tax credit for each month that they provide care in an underserved rural community. The legislation has remained in the Senate Finance Committee without action since January.

Murkowski also conducted a field hearing on patient access to care and the state's physician shortage on Feb 20. There, she got an earful about the fallout from inadequate Medicare payment.

"During the last year, the (Alaska) Commission on Aging has received many comments and much anecdotal evidence that seniors have been denied service or have been unable to find a primary care physician who will accept new Medicare patients," said Frank Appel, chair of the commission, during the hearing. Appel's own physician dropped participation in Medicare last summer, and Appel said he was considering flying to Seattle for his yearly primary care appointment.

Rita Hatch, a volunteer with the Alaska Older Persons Action Group, echoed Appel. "The most important issue facing seniors in Alaska today is finding a physician who will take them as new Medicare patients," she said during the hearing. "What good is having a prescription drug program in Medicare if you can't find a doctor to write a prescription? What good is paying for Medicare Part B if you can't find a doctor to treat you? … As far as I know, this problem exists in every city in Alaska."

Data support the anecdotes. A July 2006 GAO report (PDF file: 68 pages / 2.9 MB. More about PDFs.) found that, although the majority of elderly patients nationwide reported having little trouble finding a physician who accepted Medicare, Alaska led the nation with the highest proportion -- 15 percent -- of Medicare beneficiaries who reported "having a big problem finding a personal doctor or nurse." Moreover, 11 percent reported a problem seeing a specialist, and 5 percent reported "never being able to schedule an appointment promptly."