Yesterday, the American College of Surgeons alongside 20 additional surgeon groups sent a letter to Senate leaders expressing major concerns with the health care restructuring bill.
Their intent is to put Senate Majority Leader Harry Reid (D-NV) on notice that the surgeons will oppose health care restructuring unless several key provisions in the Finance Committee's bill are removed or revised. One of these provisions that they point to is the "Death Spiral" provision. For other posts see here and for articles see here.
As the letter (available here) explains it, the provision is "reducing payments to physicians who are found to have the highest utilization of resources -- without regard for patient acuity or complexity of the care being provided..."
Under the Senate Finance Committee health care restructuring bill, this "Death Spiral" provision mandates that doctors who authorize treatments for their Medicare patients that wind up in the top 10% of per capita cost for a year will lose 5% of their total Medicare reimbursements for that year. In the game of musical chairs, there is always one chair less than the number of players – so no matter how fast the contestants run, someone will always be the loser when the music stops. Similarly, under the penalty provision, a moving target is created – by definition, there will ALWAYS be a top 10%, no matter how far down the total amount of money spent on Medicare is driven.
It has also been reported that these groups (representing nearly a quarter of a million physicians) intend to bring up their complaints at this weekend's American Medical Association conference.
 The provision is (from language available at the Senate Finance Committee website) in "SEC. 3003. IMPROVEMENTS TO THE PHYSICIAN FEEDBACK PROGRAM." Beginning on page 683, the bill reads:
“(b) INCENTIVES FOR AVOIDING EXCESS UTILIZATION.—Section 1848(a) of the Social Security Act (42 U.S.C. 1395w–4(a)), as amended by section 3002(b), is amended by adding at the end the following new paragraph:9) INCENTIVE FOR AVOIDING EXCESS UTILZATION.—(A) IN GENERAL.—With respect to physicians’ services furnished by an applicable physician on or after January 1, 2014, the fee schedule amount for such services furnished by the applicable physician during the year (including the fee schedule amount for purposes of determining a payment based on such amount) shall be 95 percent of the fee schedule amount that would otherwise apply to such services under this subsection (determined after application of paragraphs (3), (5), (7),and (8), but without regard to this paragraph).(B) APPLICABLE PHYSICIAN.—In this paragraph: (i) IN GENERAL.—The term ‘applicable physician’ means a physician which the Secretary determines is at or above the 90th percentile of resource use (or, if applicable, the standard measure of utilization specified under subparagraph (C))with respect to a composite measure per individual, such as the composite measure under the methodology established under subsection (n)(9)(C)(iii).
While these adjustments may reduce the degree to which physicians are disproportionately penalized if they have sicker patients or work in high-cost areas, they do not change the fundamental danger of this provision, which (as explained above) is to create continual pressure on doctors to make ever-increasing reductions in the treatments and tests they order for their patients so as to avoid being in the penalized top 10%. The Congressional Budget Office rates this as taking almost $1 billion from Medicare payments over a period of 6 years. See CBO 10/07/09 letter to Chairman Baucus, Table, page 3 of 9.