MedPAC Calls for 1 Percent Overall Payment Increase in 2011

The Medicare Payment Advisory Commission, or MedPAC, will ask Congress to approve a 1 percent increase in the Medicare physician payment rate for 2011 and to provide a budget-neutral payment increase next year for physicians whose practices are focused on primary care services.

MedPAC members approved the recommendation (2-page PDF; About PDFs) calling for the 1 percent payment increase during a MedPAC meeting here on Jan. 14. MedPAC members also agreed to reissue a recommendation put forth last year advising Congress to approve a budget-neutral increase for primary care services provided by physicians who focus on primary care. The two recommendations will be included in MedPAC's annual March report to Congress.

MedPAC Chair Glenn Hackbarth, J.D., described the primary care bonus as a "good thing to do," saying that, "as a country, we are facing serious problems potentially with access to primary care."

Cristina Boccuti, M.P.P., a MedPAC analyst, said during the meeting that the recommendation calling for the primary care increase would "emphasize the importance of access to good primary care in a well-functioning delivery system."

MedPAC's recommendation for a 1 percent increase in the Medicare physician payment rate for 2011 is based, in large part, on a need to be "fiscally disciplined while maintaining access to physician services," according to Boccuti. If enacted, the 1 percent hike would increase Medicare spending by more than $2 billion in 2011 and by more than $10 billion during the next five years, leading MedPAC to add the budget-neutral language in its recommendation for an increase in payment.

Boccuti also presented findings from an annual nationwide MedPAC survey (13-page PDF; About PDFs) that gauges and compares access to physician services by Medicare and privately insured patients. The survey, conducted in the fall of 2009, polled 4,000 Medicare beneficiaries ages 65 and older and 4,000 privately insured patients between the ages of 50 and 64 years. It found that most Medicare beneficiaries are able to get timely appointments and can find a new physician when they need one. The survey also found that Medicare beneficiaries report similar or better physician access than privately insured individuals.

In addition, the survey found that most Medicare and privately insured patients are not looking for new physicians. Only 6 percent of Medicare beneficiaries and 8 percent of privately insured individuals sought new primary care physicians during the past year. The report also found, however, that beneficiaries who were looking for new physicians had more difficulty locating new primary care physicians than new subspecialists.

"I think the trends in primary care for all types of patients are bad, and as a society, we need to be intervening to try and improve that," said Hackbarth.

MedPAC analysts also looked at outside studies and focus groups to further gauge access to physician services. That analysis showed that most physicians are accepting Medicare patients, but physician acceptance of private insurance varied by plan and market area.

Not surprisingly, most physicians complained that Medicare payments were lower than those of many private payers, but they liked other parts of the Medicare system, the analysis showed. According to MedPAC, Medicare fees, on average, are 20 percent lower than those paid by private plans, a gap that has remained steady during the past decade.

The MedPAC survey also found that volume growth is the main culprit in driving actual Medicare spending, and volume has increased faster than input prices and physician payment updates. In 2008, Medicare spent about $61 billion on fee-for-service physician services, which accounts for about 13 percent of total Medicare spending for that year, according to MedPAC.

Physician payment updates increased less than 20 percent between 1997 and 2008, and the Medicare economic index increased by a little more than 30 percent during that nine-year period, according to MedPAC. During the same period, however, Medicare spending on physician services per fee-for-service beneficiary jumped 90 percent.