California Healthline Examines Recent Developments Related to Medicare

The following summarizes news coverage of recent developments related to Medicare. Summaries appear below.

• Ambulance reimbursements: Reps. Thomas Reynolds (R-N.Y.) and Thomas Allen (D-Maine) have introduced a bill (HR 2014) that would change the Medicare payment formula for ambulance services in rural areas, CQ HealthBeat reports (CQ HealthBeat, 5/5). Ambulance companies in rural areas currently are reimbursed at a lower rate than similar companies in urban areas because payments are based on population density instead of actual costs (Kelly, Binghamton Press & Sun-Bulletin, 5/5). According to Reynolds and Allen, the system does not adequately reimburse rural ambulance providers for their services, and many companies have been forced to reduce or discontinue service as a result. The bill would require CMS to set Medicare ambulance payment rates "at amounts that would fully compensate providers for those costs" (CQ HealthBeat, 5/5). The Congressional Budget Office has not yet estimated the cost of the potential change (Binghamton Press & Sun-Bulletin, 5/5).
  
  
• Living wills: A "large body of scientific data" contradicts a statement made by HHS Secretary Mike Leavitt this week that encouraging Medicare beneficiaries to draft living wills could reduce program costs, the Washington Post reports. In a series of academic articles, researchers have outlined reasons why advance directives do not have a significant impact on medical spending, the Post reports. These include that many patients sign documents with limited or conflicting instructions, many do not include do-not-resuscitate orders, some doctors do not comply with instructions and not all living wills call for less-aggressive or less-costly treatments. In addition, there is a common misconception that high end-of-life costs are from expensive modern technology, when in fact the most costly parts of end-of-life treatment are from "custodial care," such as continual nursing care and pain medications, according to Joan Teno, a professor of community health at Brown Medical School. HHS spokesperson Kevin Keane said Leavitt "regrets if the comment was inaccurate. He did not intend to link living wills to the issue of costs." Keane added, "The point [Leavitt] was making is living wills are something families should consider to save themselves anguish in times of tragedy" (Washington Post, 5/6).
  
  
• Physician payments: AARP is preparing to distribute figures that show how reversing a scheduled cut in Medicare physician payments would affect beneficiaries' premiums, CongressDaily reports. Medicare is scheduled to reduce payments to physicians by about 4% on Jan. 1, 2006, and lawmakers are considering reversing the planned cut as they have similar reductions for the past three years. The American Medical Association has warned that if the scheduled cut is not averted, physicians might stop treating Medicare beneficiaries. AARP lobbyist Kirsten Sloan said that if the reversed cut results in significant program costs, "you're going to get to the point where beneficiaries won't be able to afford the premium." AARP has calculated that freezing doctor payments at 2005 levels would increase premiums by $1.10 per month next year -- in addition to the $7 to $8 monthly increase already expected -- and by $5.70 by 2009. Increasing physician payments by 1.5% would raise premiums by $1.50 monthly next year, AARP said. In addition, removing the cost of physician-administered drugs from the payment formula altogether -- as AMA has requested -- would add $2.40 per month in premiums next year and $9.10 by 2009, according to the calculations. Meanwhile, Rep. Pete Stark (D-Calif.) said Congress likely will change the Medicare physician payment formula at some point, but it is not likely to be this year (Rovner, CongressDaily, 5/6).

Health care costs are "out of control," and Medicare is "going broke before our very eyes," but everyone is "too busy talking about Social Security," Robert Reich, former U.S. secretary of labor and a professor of social and economic policy at Brandeis University, said in a commentary on APM's "Marketplace" on Wednesday.

According to Reich, the Bush administration wants to avoid a national discussion of ways the government could reduce health care costs -- such as using its "bargaining clout" as the nation's largest medical purchaser to reduce the cost of prescription drugs and health insurance -- because it would require a "more proactive" government, which "flies in the face of conservative ideology."

Reich concludes that Democrats should offer "detailed" plans to control health care costs and the media should inform U.S. residents about the dangers Medicare's "real" crisis poses (Reich, "Marketplace," APM, 5/4). The complete segment is available online in RealPlayer.