Scheduled Medicare Physician Payment Cuts ‘Concern’ Bush Administration
Bush administration officials say they are "deeply concerned" that a scheduled cut in Medicare payments to physicians will limit seniors' access to care, the New York Times reports (Pear, New York Times, 10/25). In January, payments to physicians were cut 5.4%, and they are scheduled to be gradually reduced by another 12% between Nov. 1, 2002, and 2005 (California Healthline, 10/16). As part of those reductions, Medicare officials next week are expected to announce a 4.4% cut that will take effect Jan. 1, the Times reports (New York Times, 10/25). According to a recent analysis by the American Medical Association, the cuts could reduce provider payments by $11 billion over three years (American Health Line, 10/16). The Times reports that the Bush administration has "taken an interest" in the reductions, in part to avoid alienating doctors and seniors before the Nov. 5 election. While HHS Secretary Tommy Thompson said he and CMS Administrator Tom Scully are "very concerned" about the cuts, he also said the administration does not have the "statutory authority" to prevent the scheduled payments cuts. Medicare law states that "there shall be no administrative or judicial review" of its payment formula, according to the Times.
The Times reports that the current conflict over Medicare payment rates stems from the federal government's having underestimated both the rate of economic growth in the late 1990s and the number of beneficiaries enrolled in the fee-for-service program. Because HMOs have withdrawn from the Medicare+Choice managed care program at higher-than-expected rates, the annual Medicare payment update does not account for the one million seniors who have returned to the fee-for-service program, according to Rep. Nancy Johnson (R-Conn.). Some lawmakers, including House Ways and Means Chair Bill Thomas (R-Calif.), have pushed the White House to correct the "technical errors" independently. Scully said that "glitch" in the Medicare physician fee schedule "needs to be fixed." However, he added, "We've scoured the earth to find a lawyer who says we have the authority to fix it administratively, but the lawyers cannot find a way." The Times reports that Medicare officials also are concerned that if they find a way to correct the discrepancies in the payment system, they could expose the government to lawsuits seeking reimbursements for errors that occurred in the past. Without a fix, however, many doctors say they will limit their participation in Medicare, creating access problems for seniors, according to administration officials. The Times reports that doctors in dozens of states are refusing to take new Medicare patients because they contend payments are not large enough to cover costs. According to the physicians, additional cuts will "accelerate the trend" (New York Times, 10/25).
In June, the House passed a $30 billion Medicare package that includes provider "giveback" provisions and a prescription drug benefit. However, the Senate has failed several times to pass Medicare prescription drug benefit legislation or a giveback bill (California Healthline, 10/24). The Times reports the giveback proposals have been "bogged down" due to pressure from consumer advocates, hospitals, nursing homes and HMOs (New York Times, 10/25). For example, AARP officials have said that the Senate should not increase reimbursements for Medicare providers without also adding a prescription drug benefit for beneficiaries (California Healthline, 10/10). Families USA would prefer that lawmakers balance any Medicare giveback legislation with assistance for the uninsured and people with low incomes by passing more funding for CHIP and Medicaid (California Healthline, 10/24). Hospitals, nursing homes and HMOs also are lobbying Congress for additional Medicare funding, saying reductions in their payments should be decreased if Medicare payments to doctors are raised, the Times reports (New York Times, 10/25). Despite the competing interests, some health policy experts predict Congress will reach a consensus on a Medicare provider giveback bill this year (California Healthline, 10/24). If Congress does "stop the erosion of Medicare payments, doctors will renew their commitment" to Medicare, Darrin Ocke, a spokesperson for the Medical Society of the State of New York, said. "[I]f it's not fixed, there is a real likelihood of major service disruptions after Jan. 1," he added (New York Times, 10/25).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.