With the specter of a 21.2 percent reduction in Medicare reimbursements on June 1, local physicians variously describe the mood among their colleagues as shellshocked and a mixture of frustration and resignation.

On Thursday, President Barack Obama signed the Continuing Extension Act of 2010, retroactive to April 1, which blocks the reduction in reimbursement until June 1, the third time this year it has been pushed back.

"They just keep kicking the can down the road," said Amelia Pare, a South Hills plastic surgeon, who said her office had put off hiring until they have a better idea what Congress will do.

At issue is the Medicare Physician Fee Schedule, which uses a formula that determines how much doctors get paid for treating Medicare patients based on a number of cost-related factors including inflation and geographical location.

The rub is that the Balanced Budget Act of 1997 requires that the rate must align the program's budget with ever-escalating health-care costs - something that hasn't happened since 2002.

Every time the required cuts are about to kick in - with potentially disastrous financial effects on physicians and hospitals - Congress steps in to stop them. But that just pushes the crisis back another year, further enlarging the deficit.

J. James Rohack, president of the American Medical Association, told Health Care Finance News in November that because of the temporary fixes, "In four years, the cost of a permanent solution ballooned from $49 billion to more than $200 billion and cuts increased from under 5 percent to a whopping 21.2 percent."

The issue carries particular importance in southwestern Pennsylvania for a couple of reasons. The first and most obvious reason is the region's large elderly population, which means physicians here typically have a higher Medicare patient load. Another is the formula used for setting reimbursement rates, specifically the geographic-based component that adjusts for areas with a higher cost of living.

Dennis Olmstead, chief economist for the Pennsylvania Medical Society, said the Centers for Medicare & Medicaid Services has divided Pennsylvania into two zones. One zone includes Philadelphia and four adjoining counties; the other covers the rest of the state. As a result, he said, "Downtown Pittsburgh gets paid what Elk County gets paid," which is one of the lower rates in the nation.

Nationally, the annual threat of a massive Medicare cut often leads to speculation that physicians will either limit or stop treating Medicare patients. Local physicians say that probably won't happen here,

"At least half of your patients can be Medicare. You can't afford not to take them," said Kevin Garret, a surgeon at UPMC St. Margaret. But if reimbursement cuts are severe enough, he noted, doctors could be treating 20 percent more patients with 30 percent smaller staff, just to meet overhead costs.

The larger implication locally, say some, could be a few years down the road.

John F. Delaney, a neurologist and psychiatrist currently serving as president of the Allegheny County Medical Society, said he met this week with some medical students who told him they will graduate with $160,000 in medical school loans.

If Medicare pays doctors $20 for an office visit - $15 if the cuts are implemented - how long will it take a newly minted family physician to pay off their debt?

"You can only see so many patients in an hour," said Dr. Delaney. "The kids are being forced to choose specialties where they can finish quickly, get hired and pay their loans back."

John G. Krah, executive director of the Allegheny County Medical Society, said that was just one reason why younger physicians are finding it more lucrative to practice outside Pennsylvania. He fears that in eight to 10 years, the region will reach a point where young physicians are leaving and older physicians "get to the point where they say, 'This just isn't worth it.'"

That's when Medicare patients may find that the doctor is not in.

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