AAOS’ Response to Medicare Payment Reform Is Nuanced

Editor’s note: This article is part of a yearlong series, Advocacy 201, which focuses on the work of the Advocacy Council to improve the practice of orthopaedic surgery.

In December 2021, the AAOS Advocacy Council and the AAOS Office of Government Relations successfully mitigated the scheduled Medicare payment cuts slated for Jan. 1, 2022. Through our advocacy efforts, we were able to stall the onset of reimbursement cuts. Unfortunately, existing law and proposed rules require AAOS Fellows and staff to once again fight to stall cuts to reimbursement.

An orthopaedic surgeon friend recently told me: “It’s not about the money, Doug—it’s about the money.” Physicians are called to their profession to relieve human suffering and improve quality of life. We labor at this cause, often ignoring personal health and obligations to family and friends. We strive to place patients first in decisions and priorities. Although we expect to be appropriately remunerated for our work, the definition of “fair compensation” is widely interpreted across the political and sociologic spectrum. When considering the concept of payment reform, it is important to understand that there are many different approaches to this topic and to consider different opinions to widen our viewpoint.

AAOS Fellows recognize the need for Medicare’s physician payment reform. According to a survey by Weatherby Healthcare, only 53 percent of orthopaedic surgeons feel that they are fairly compensated compared with 79 percent of oncologists. However, of the 29 specialties included in the survey, orthopaedic surgery trails only plastic surgery as the most highly compensated specialty. We often hear of stagnant or decreasing pay for physician services, but national trends may suggest otherwise. Interpreting SullivanCotter’s 2019 Physician Compensation and Productivity Survey, an article published in Becker’s Hospital Review stated: “Continuing a decadelong trend, total cash compensation increased in 2019 for physicians across all major specialty groups, including primary care, medical, surgical, and hospital-based specialties.”

Although it may be true that our compensation has increased, the purchasing power of that money has lessened due to inflation. According to a study from Doximity, the “average pay for doctors increased by 3.8 percent [in 2021], which is up from an increase of 1.5 percent [in 2020]. Like [in 2020], the increase did not outpace the rate of inflation. In 2021, the 12-month headline inflation rate was 6.2 percent as measured by the Consumer Price Index. Thus, physicians on average experienced a decline in real income over the calendar year when compared with inflation.”

The AAOS Position Statement “Principles of Medicare Reform and Access to Specialty Care” states, “The Medicare program needs fundamental reform because of its impending financial crisis. … Policymakers must undertake a thorough review of all program components, including healthcare delivery and benefits, payments to providers, and initiatives to contain costs.” This statement is apropos recognizing that the cost of healthcare in the United States is significant and surpasses every other country in the world. Estimates from 2020 suggest that Americans spent $4 trillion on healthcare, which equals $10,202 per person. Unfortunately, the expense associated with U.S. healthcare does not accompany a commensurate increase in quality, and the reason for this relative disparity is unclear.

The dilemma is as follows: How do orthopaedic surgeons effectively advocate for payment reform, to maintain our revenues, in an environment where the cost of healthcare continues to escalate out of control? While so many suffer due to limited access to healthcare, how can we gain support for the position that physicians are not compensated fairly? How can we more effectively advocate to relieve the pressures on orthopaedic surgeons’ ability to practice when legislators and political leaders do not seem to care about our financial renumeration? When politicians consider the current state of healthcare in the United States, how well do our arguments resonate with them?

Last December, the AAOS Advocacy Council and the AAOS Office of Government Relations worked to mitigate the Medicare payment cuts scheduled for 2022, including sequestration cuts. Congress has enacted a 2 percent cut on most federal spending, as mandated by the “sequester” in the Budget Control Act of 2011. The sequester affected far more economic sectors than just healthcare alone. Through advocacy efforts, the onset of reimbursement cuts was postponed until April 1, when the reduction in payments started at 1 percent. The cut increased to 2 percent in July, which is the reduction in payment mandated by law.

In another win, the 4 percent Pay As You Go (PAYGO) cut was successfully delayed until January 2023. AAOS will aggressively advocate for the elimination or delay of the PAYGO cut when Congress is willing to reconsider the issue in the fourth quarter of this year. We will remind legislators that orthopaedic surgeons have sustained significant economic losses through the pandemic, and the enacted sequester cuts are continuing to drive down our margins. Without Congressional action, the 4 percent PAYGO reduction will go into effect in January 2023.

Lastly, the Medicare Physician Fee Schedule conversion factor was scheduled to be reduced 3.75 percent in 2022. The conversion factor is a multiplier that, when combined with a procedure’s associated work and practice expense and liability relative value units adjusted for geographic price indices, determines the amount that Medicare will pay for a given procedure. A reduction in the conversion factor would be the same as an across-the-board reduction in surgical fees for Medicare patients. Through joint lobbying efforts last December, physicians were able to convince Congress to reduce the conversion factor by 0.75 percent instead of the full 3.75 percent. As with PAYGO, AAOS will advocate for these cuts to be repealed or delayed again this December.

Although AAOS advocates for orthopaedic surgeons, it is important to be mindful of the challenges that U.S. leaders are facing. The federal government does not have enough funding to pay for all the programs it has committed to sustaining. The Medicare Trust Fund is scheduled to run out of money in 2028. Orthopaedic surgeons should continue to participate in alternative care models that improve patient outcomes at reasonable costs to provide high-value care to patients demonstrating the worth of our efforts to lawmakers. Physicians and policymakers must partner to solve the dilemma of healthcare financing in the United States.

Douglas W. Lundy, MD, MBA, FAAOS, is chair of the Department of Orthopaedic Surgery at St. Luke’s University Health Network and chair of the AAOS Advocacy Council.

References

1. Stewart H: Physician Salary Report 2022: Physician Income Rising Again. Available at: https://weatherbyhealthcare.com/blog/annual-physician-salary-report. Accessed June 2, 2022.

2. Wilcox L: Physician Salary Report 2021: Compensation Steady Despite COVID-19. Available at: https://weatherbyhealthcare.com/blog/annual-physician-salary-report-2021. Accessed June 2, 2022.

3. Rappleye E: Four Trends in Physician Pay. Available at: https://www.beckershospitalreview.com/compensation-issues/4-trends-in-physician-pay.html. Accessed June 2, 2022.

4. Doximity: 2021 Physician Compensation Report: Fifth Annual Study. Available at: https://c8y.doxcdn.com/image/upload/v1/Press%20Blog/Research%20Reports/Doximity-Compensation-Report-2021.pdf. Accessed June 2, 2022.

5. AAOS: Position Statement: Principles of Medicare Reform and Access to Specialty Care. Available at: https://aaos.org/globalassets/about/position-statements/1175-principles-of-medicare-reform-and-access-to-specialty-care.pdf. Accessed June 2, 2022.

6. Statistics Research Department: Health Expenditures in the U.S.—Statistics & Facts. Available at: https://www.statista.com/topics/6701/health-expenditures-in-the-us/#dossierKeyfigures. Accessed June 2, 2022.

7. Wagner E, Ortaliza J, Cox C: How Does Health Spending in the U.S. Compare to Other Countries? Available at: https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries-2/. Accessed June 2, 2022.

8. Peter G. Peterson Foundation: Why Are Americans Paying More for Healthcare? Available at: https://www.pgpf.org/blog/2022/02/why-are-americans-paying-more-for-healthcare. Accessed June 2, 2022.

9. Coultas K: Advocacy Leaders Advance Key Priorities During Combined NOLC/Fall Meeting. AAOS Now. Dec. 2021.