Can Congress pass a long-term Medicare rate cure?

WASHINGTON–Can Congress come up with a real cure for the maladies of the Medicare physician payment system?

Lawmakers have proven themselves adept at applying Band-Aid solutions, passing repeated short-term fixes to stave off steep payment cuts to doctors who treat Medicare patients. But physicians in Connecticut and across the country have said these temporary steps, no matter how certain, are no longer enough to keep them from abandoning the seniors’ health care program.

So what’s the likelihood that lawmakers in Washington will solve this $300 billion problem? And how might Congress find that kind of money in these tight fiscal times?

President Barack Obama’s bipartisan debt commission has outlined one possible solution. It would spread the pain all around: Doctors would have to accept some reduced reimbursements, seniors would have to pay more out-of-pocket costs, and lawyers would see jury awards capped in medical malpractice cases.

The fiscal commission estimates these and other steps could save $282 billion over the next decade. But these ideas, outlined earlier this month in a preliminary draft issued by the commission’s co-chairs, has already sparked considerable opposition.

“The commission contributes almost nothing to this debate,” said Rep. Joe Courtney, D-2nd District, who has closely tracked the Medicare payment problem.

“At a time when you want more people to access care at the front end, this doesn’t speak to any of that,” said Matthew C. Katz, executive vice president of the Connecticut State Medical Society. Save the proposal for tort reform, Katz said, there’s little to like in the commission’s recommendations.

Nevertheless, the commission’s ideas are likely to be front-and-center this week and beyond, as lawmakers look for ways to solve both the Medicare problem and the much larger budget crisis.

The co-chairs’ proposal calls for reforming the Medicare reimbursement formula that doctors have come to hate, known as the sustainable growth rate, or SGR. Under the co-chairs’ plan, there would be no cuts in Medicare physician reimbursements for the next two years, and then smaller cuts than in current law starting in 2013.

But Courtney and others say more fundamental change is needed, involving complete repeal of the SGR, which dates to 1997.

The commission’s proposal preserves an “arbitrary formula with slash and gash,” Courtney said. “It’s not rewarding good practice.”

Robert Berenson, a health care expert at the Urban Institute, agreed that anything that simply “whacks” at Medicare reimbursement will not work in the long term, whether the whacks are big or small.

“That will set up a two-class health care system in which doctors can get higher rates outside of Medicare … and those doctors who can avoid Medicare patients will do so,” Berenson said.

He said there needs to be a more thoughtful revamping of Medicare’s payment system, in which, for example, there’s not as much difference between how much private insurers and the government pay doctors for their services.

There also needs to be a serious overhaul of Medicare’s payment scale, which he says currently reimburses physicians too much for tests, procedures, and specialists–and not enough for primary care doctors and simple office visits.

“Procedures do much better than time spent for doctors who are actually talking to patients and figuring out how to treat a patient,” he said. “Redistribution toward generalists and away from specialists is in order.”

Berenson said a proposal by the top commissioners to make seniors responsible for more of their co-pays and other health care expenses, known as “cost-sharing,” makes more sense. But such a move carries risks. Right now, many elderly patients purchase supplemental insurance, so-called “Medigap policies,” that cover expenses Medicare doesn’t.

That means they often pay nothing when they to go to the doctor, so there’s no disincentive to schedule another appointment, get another test, or take another prescription. That, in turn, drives up Medicare expenditures. The commission’s co-chairs call for limiting Medigap cost-sharing coverage.

“When you have no out-of-pocket obligation of any kind, you use more services,” Berenson said. “So this suggests that people should feel at least a little financial pain when they want a service.”

But, he cautioned, you don’t want to make the pain so severe that patients fail to get needed check-ups or skip their hypertension medications, which would cause increased health care costs, not to mention ill-health. “It may well have some merit to have more rational cost-sharing,” he said. “But it’s a tricky area.”

Courtney said he’d be willing to look at cost-sharing proposals but sounded similarly wary.

“The economists caution us about reducing utilization, but on the other hand, people see the damage done when you don’t get early checks up and cancer screenings,” Courtney said. “One of the things the system is trying to promote is wellness and prevention. Where does cost-sharing fit into that?”

Even more contentious is a proposal to strengthen the Independent Payment Advisory Board, an entity established by the new health reform law. This panel, yet to be named, could hold significant sway over the future of Medicare, since its charge is to limit the growth of Medicare spending. If Medicare expenditures exceed set targets, the IPAB is required to send proposals to Congress detailing specific cuts.

Congress has to accept the IPAB’s recommendations unless lawmakers can come up with alternative savings. Proponents say the IPAB is vital, since Congress has shown little political will to make tough choices when it comes to Medicare.

Many lawmakers opposed the creation of this board to begin with, saying it usurped Congress’ authority to set federal spending policy for Medicare. So there’s little appetite to enhance the IPAB’s powers. And doctors are not about to lead the charge.

“You don’t need more bureaucracy in medicine, you need less,” said Katz, of the Connecticut State Medical Society. He’s worried the IPAB will be made up of “bureaucrats and economists,” ready to set arbitrary spending caps that will have little connection to realities of patient care.

Courtney said there were a few proposals the commission endorsed that were good–all items that build or speed up the implementation of health care reform and would help the current system pivot from a focus on fees charged to a focus on care delivered.

Courtney said the solution to the current crisis, in which doctors are threatening to flee Medicare, is at hand. All the reforms put in place by the health care overhaul, he said, will produce enough savings to cover the $300 billion ten-year cost of fixing this problem.

“There really are potentially dramatic savings there because you are transforming the way health care is going to be delivered,” Courtney said, although he conceded those are projected savings, not yet on the federal books. Still, he said the commission should have made explicit note of the cost-curbing reform measures, to put an end to the debate over repealing the health reform law that’s likely to dominate Washington over the next year. The co-chairs’ outline does call for building on health reform’s cost-curbing measures, but it doesn’t address the GOP calls for repeal.

And whether lawmakers have the stomach to tackle a whole new set of health care reform measures to address the Medicare payment problem remains to be seen.

“I’m cautiously optimistic that they will recognize they need to transform the system if they want to ensure access,” said Katz. “They have to do something before the bubble bursts.”

Katz said the current fiscal climate, in which lawmakers will be looking for fresh savings, could be the opportune moment to address this issue.