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Senior Citizen Politics
Physicians May Have Won Battle Over Medicare Pay Cut
but War Still Looms in Future
If Congress based physician fee increases on the rate
of medical inflation, it would cost $65 billion over the first five
years
 July 15, 2008 Physicians that treat Medicare
patients may have won the battle but the war is far from over, when it
comes to fighting off legislation at will reduce the pay they receive
from the governments health insurance plan for senior citizens.
Congress, after a long battle, okayed legislation last week to stop a
ten percent pay cut for this year but even larger cuts are looming in
years to come, which some see as a hindrance to seniors in finding
medical care.
Legislation (HR
6331) that would delay a 10.6% reduction to Medicare
physician fees, scheduled to take effect on July 1, could lead to a
reduction to physician fees of more than 20% in 2010 unless a long-term
solution is found, the
New York
Times reports.
Although the recently passed bill would delay a
reduction to physician fees for 18 months, it would not alter the
Medicare payment formula that Congress established in 1997.
CMS sets payment rates
for 7,000 different services under Medicare once annually, using a
"complex formula" that sets goals for spending on physician services
based on the annual gross domestic product. Under the plan, payments are
reduced if actual spending exceeds the goals. When Congress passes a
bill to delay those reductions, Medicare is directed to recoup the funds
by making larger reductions in future years.
Some physicians say the formula works well "when
the economy is booming," according to the
Times. The formula treats
all physicians equally, regardless whether they keep beneficiaries in
good health or control spending.
The formula also does not establish appropriate and
inappropriate increases in services or mandate which services can be
done in physicians' offices instead of hospitals. Lawmakers from both
parties agree the policy is "broken," according to the
Times.
Many physicians want the formula eliminated because
they say their costs are rising faster than the rate of fee increases.
However, the
Congressional Budget Office
found that if Congress based physician fee increases on the rate of
medical inflation, it would cost $65 billion over the first five years
and another $200 billion over the ensuing five years. Health policy
experts and lawmakers say that if the issue remains unresolved, it "will
come back to haunt" the next president and Congress, the
Times reports (Pear,
New York Times,
7/13).
Interests Continue Lobbying
AARP and
America's Health Insurance Plans
are actively pursuing their goals related to the recently passed
Medicare legislation because President Bush has vowed to veto it,
The Hill
reports (Young, The Hill,
7/13). The Bush administration opposes the bill because it would make
cuts to Medicare Advantage, which it believes would reduce choices for
beneficiaries, according to the
Chicago
Tribune (Graham, "Triage,"
Chicago Tribune, 7/11).
AARP in a letter asked Bush to reconsider vetoing
the measure. The group also forwarded 45,000 e-mails from members and
proponents of the legislation to the White House. AARP plans to run
advertisements supporting an override vote should Bush veto the bill. It
will also encourage beneficiaries to visit lawmakers' offices and
organize a letter-writing and telephone campaign.
AHIP is attempting to convince lawmakers to change
their vote on the legislation if an override vote occurs because they
believe the measure will reduce access to plans under MA (The
Hill, 7/13). CBO last week said that as many as 2.3
million beneficiaries could leave MA if the bill becomes law ("Triage,"
Chicago Tribune,
7/11). AHIP is targeting press releases that project how many
beneficiaries will lose access to MA plans if the measure becomes law in
states such as Georgia, Pennsylvania and Virginia, the home states of
Republican senators who originally opposed the measure but changed their
votes last week, according to The
Hill.
The Hill
reports that "the campaigns by the AARP, AHIP and others may be moot."
If Bush vetoes the measure, House and Senate
leadership say the chambers will quickly hold veto-override votes.
Sixty-five representatives or three senators would have to change their
positions and vote against a veto override for the measure to fail.
Eight of nine Republican senators who changed their votes last week and
approved the bill have said they would vote for a veto override,
according to The Hill.
The remaining vote, Sen. Lamar Alexander (R-Tenn.),
has not disclosed whether he would vote for or against an override. Sen.
Kit Bond (R-Mo.), who voted against the bill, also said he would vote
for an override (The Hill,
7/13).
Bidding Program
The legislation to delay physician fee reductions
also would have implications for suppliers of durable medical equipment
under Medicare, CQ Today
reports. It would delay for 18 months a competitive bidding pilot
program that went into effect in 10 of the largest Metropolitan
Statistical Areas on July 1. It also would cancel contracts awarded to
about 325 companies out of more than 1,000 that submitted bids.
According to
CQ Today, some of the
contract winners are preparing to cut back expansions that were made to
fulfill the new contracts and some are contemplating bringing legal
action if the program is rolled back and delayed. Jeffrey Holman --
president of First Priority Medical Services, one contract winner --
said that companies might have little legal recourse if the program is
rolled back because the contracts specified that they were "subject to
changes in regulation and law." He said that companies losing the
awarded contracts might only be given reparation if CMS chooses to do
so.
Holman also said that the program likely will help
fight fraud
discovered in the system
and that if the program is rolled back, providers that take part in such
schemes would be allowed back into the system. "They just let all the
bad guys right back in the business," Holman said. The
Government Accountability Office
has found that more than 10% of Medicare payments annually to DME
suppliers are "improper," according to
CQ Today (Wayne,
CQ Today, 7/11).
Private Fee-for-Service Networks
The legislation also would require so-called
private fee-for-service plans under MA to establish provider networks,
Florida
Health News reports. The plans are the fastest growing
and highest paid of all offerings in MA.
Although just 1.7 million of the 44 million U.S.
residents under Medicare are enrolled in fee-for-service plans, such
plans have grown eightfold over the last two years, according to the
Medicare Payment Advisory Commission.
The plans would have until 2011 to establish the networks under the
bill. Current Medicare law does not have such a requirement, which often
makes it difficult for many beneficiaries to find a provider within a
reasonable distance of their home, according to
Florida Health News
(Jaffe, Florida Health News,
7/11).
Bush Administration
The
Washington
Post on Sunday reported that while Bush has recently
been "engaging in the kind of conciliation with opponents that his
administration has often avoided," his "willingness to compromise
remains limited" and he continues to threaten to veto the Medicare
legislation.
The Medicare bill had support from 18 Republicans
in the Senate and many Republicans in the House. According to the
Post, "Even two of Bush's
staunchest Senate allies," Texas Sens. John Cornyn and Kay Bailey
Hutchinson, "abandoned him and switched sides." White House spokesperson
Tony Fratto said that any perceived change has more to do with a change
in the political climate than a change in White House strategy
(Eggen/Kane, Washington Post,
7/13).
SCHIP Expansion
With the Democrats' "big win" on Medicare, a House
Democratic leadership aide said that the issue of SCHIP expansion might
be brought up in Congress again, the
Wall
Street Journal reports. The aide said there is a
"strong possibility" that there will be a new vote on expanding the
program. However, the "broad backing for the Medicare bill may not
translate to SCHIP," according to the
Journal. Last year, there
were not enough votes in Congress to override a veto of legislation that
would have expanded the program (Goldstein, "Health Blog,"
Wall Street Journal,
7/11).
Opinion
Two newspapers published an editorial and a letter
to the editor related to the Medicare bill. Summaries appear below.
New York
Times: The debate over the Medicare bill has
"underscored a disturbing truth: many of the private plans that
participate in" MA "have become a far too costly drain on Medicare's
overstretched budget," the Times
writes in an editorial. The editorial continues, "Private health plans
were promoted in the 1980s and 1990s in the belief that they could
reduce costs and improve care through better management," and "for a
while, they did."
However, "policy changes" by the Bush
administration and the formerly Republican-controlled Congress "led to
exactly the opposite outcome," according to the
Times. The
Times writes, "The
Democrats in Congress, and the Republicans who dared to join them,
deserve thanks for removing part of the subsidy." The editorial
concludes, "Bush should drop his veto threat and adopt the principle
that Medicare should pay the same amount for all beneficiaries" (New
York Times, 7/14).
Tyler Wilson,
Wall Street Journal:
HHS Secretary Mike
Leavitt "fails to mention the problems with the [Medicare DME] bidding
program" when "leading the effort to retain" it,
American Association for Homecare
President and CEO Wilson writes in a
Journal letter to the
editor. Leavitt compares "prices of medical equipment from licensed
providers to equipment obtained on the Internet," which "comes without
24-hour support, patient/caregiver education, accreditation, state
licensing or quality control," Wilson writes.
In addition, Wilson writes that Leavitt "did not
mention that the bidding program has loopholes allowing unlicensed
companies to provide sensitive equipment" and "has awarded contracts to
companies located miles away from the service area to provide equipment
they have rarely or never previously provided." Wilson concludes,
"Congress should put this program on hold until we can be assured that
Medicare beneficiaries will be treated with dignity once again" (Wilson,
Wall Street Journal,
7/14).
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