Preparing for Health Care Cuts

On January 1, federal health care rates for doctors will be cut 29.5% unless Congress acts. The cuts will be harder on primary care physicians — and that means they will cut more deeply in rural communities, which are more dependent on primary care providers.

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At one point in history, Congress did realize that health care cost increases were a huge problem. 

Various mechanisms were designed to limit health care spending. The SGR or Sustainable Growth Rate design was one of these spending limitation interventions. The SGR design typically resulted in only a few percentage points of proposed cuts. Congress has bypassed these SGR cuts year after year, often in last minute rescue sessions. 

This has set in motion the long process that has now led to a 29.5% cut in physician pay that will take effect on January 1, 2012. 

We have until the end of the year to prepare for these cuts — a health care Armageddon — if we don’t first fix the formula.  Of course those who put their dollars and efforts into stopping the cuts are not likely to be prepared for 29.5% cuts. And be forewarned: It will take some very smart planning to save our primary care system. 

The area of rural primary care is important to understand. All populations are dependent upon certain types of health care services, but some are more dependent than others. 

Physicians in rural locations are 40 – 100% primary care. Rural sites are primary care dependent and the country’s design for payments keeps primary care vulnerable. Rural primary care has operated on a razor thin edge and has often required external support to survive.

Rural primary care is more than just primary care. Rural primary care physicians provide other services to communities that do not have specialists in areas, such as emergency care, hospital care, mental health care, and geriatric care. 

Historical Background

The creation of Medicare and Medicaid and massive increases in expenditures from 1965 to nearly 1980 rebuilt rural health care. 

Funding was introduced and expanded in ways favorable to rural areas, primary care, and underserved settings. Design changes from 1980 to the present and flaws in the formulas for primary care payment have resulted in problems, however. Payments designed in the 1970s failed to supply enough revenue to deliver primary care in the 1980s. Payment rates that are relatively fixed fail to keep up with the rapidly rising cost of delivering primary care.

Unfortunately, the 1990s patch regarding physician payment retained the same fatal flaw for primary care. With each passing year, the cost of delivering primary care goes up and the reimbursement remains the same or increases at a lower rate than costs. 

Each 20 years or so, this results in a new patch required. Meanwhile, in recent years primary care has added new costs and greater costs in areas such as technology, equipment, insurance, supplies, and support personnel to mention a few. 

One rapidly growing cost area deserves mention. Alaska spends a million dollars more each year for temporary medical help, recruitment, and retention costs to attempt to maintain primary care levels. Alaska is not alone. States with lower concentrations of people, physicians, health spending, and primary care face an uphill battle with even higher costs and even shorter primary care levels. Those most at risk are rural populations most dependent upon primary care.

Many rural practices and hospitals teeter on the edge of financial viability. Hospitals facing difficulty will not be in a position to shift resources and neither will rural communities. When substantial revenue declines hit practices that tend to be dependent upon Medicare and Medicaid anyway, changes will have to follow. Primary care has no other option other than to cut personnel and deliver less primary care. Cuts in primary care work against everything we want in rural America — good health, jobs and growing economies.

Rural primary care has had specific failures in the past two years alone in areas important for health access for rural populations.

For example, only extreme efforts by rural health care associations allowed certain rural areas to benefit from federal shortage bonuses. 

The specific services (specified by certain codes) defined for bonus reimbursement were so narrow that they missed services commonly provided by broad scope primary care physicians – such as rural primary care physicians. 

A similar mistake was made in the rural health clinic settings that were left out for special funding. 

The country lacks a basic understanding of the role primary care providers play in rural areas, and not just in the federal government. The Journal of the American Medical Association (JAMA) and other journals and foundations have demonstrated insufficient understanding of rural health recent. And there will be more to come in the remaining months of the year.  

Why so many errors by so many? 

Perhaps perceptions are distorted. What the country has been led to believe for primary care, rural care, and underserved care is in error. Some would say we need to substitute an electronic primary care kiosk, or telehealth, or increased travel, or fewer sites. The flaw in this reasoning begins with a poor understanding of the importance of people-to-people interactions, belonging and relationships. Rural people may have advantages in understanding these areas compared to those immersed in large concentrations of people, income, and spending. 

Primary care demand is greatest in Medicare populations — double the national rate for age 65 to 74 and triple for age 75 and beyond. Elderly patients are also less mobile and face more transportation barriers. Remember that cutbacks are also seen in Area Aging centers and in transportation. 

And, again, primary care physicians in rural areas also deliver emergency care, hospital care, mental health care, and geriatric care. Cuts in primary care impact more than just primary care in rural areas.

But we do have about 130 days to figure something out for our communities, practices, and people.

Well 1965 to 1980 were pretty good years, but massive increases in health spending in these times seem unlikely. Also specific rural primary care spending is unlikely as well. 

Cooperation in rural health has always been essential. Cooperation must involve all who deliver health care, plus the facilities and the community. Cooperation will be required as there are even fewer dollars coming from federal and state sources. 

Rural communities must work to retain local patients within local rural clinics and hospitals. Some 40 – 60% of rural people bypass local hospitals or clinics for a variety of reasons. Market share will be far more important than ever before for communities that hope to retain their health care services.

The present has been forced upon us by our past. Wasting time and money is a luxury we do not have.

 We face the same tough question. When will we face up to the reality of our misguided designs and change them to work for most Americans instead of some?

Dr. Robert C. Bowman, M.D., founder of the Rural Medical Educators Group of the National Rural Health Association, is a physician and long time health education policy advocate. He is professor in Family Medicine at A.T. Still University School of Osteopathic Medicine in Arizona. You can read more from Bob at his Basic Health Access Blog.

 

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