Scully, Thompson Testify in Congress on Medicare Provider Payments
CMS Administrator Thomas Scully yesterday told members of the House Energy and Commerce Subcommittee on Health that the Bush administration will help Congress to revise the formula used to set reimbursement rates for physicians who treat Medicare beneficiaries -- which resulted in a 5.4% reduction Jan. 1 -- but warned that lawmakers will have to balance any reimbursement increases with decreased payments to other providers, the AP/Las Vegas Sun reports (AP/Las Vegas Sun, 2/14). Medicare reduced physician reimbursement rates this year under a formula approved by Congress in 1997, a system based in part on changes in the nation's gross domestic product (California Healthline, 1/15). "I know that it will not be easy" to find additional funds for physicians, Scully said at the hearing yesterday (AP/Las Vegas Sun, 2/14). However, he said that the "situation is not as dire" as lawmakers have said. "The system is working largely as designed," Scully said, adding that "overall spending on physician care under Medicare is still rising" because the volume of services provided is increasing. He also said that a plan proposed by the Medicare Payment Advisory Commission to do away with the current Medicare provider reimbursement formula would "produce payments that are unnecessarily high," adding that Congress may "want to opt for a shorter-term fix" (Rovner, CongressDaily, 2/14). In January, MedPAC criticized the reimbursement formula, which does not account for increases in health care costs, as "flawed" and recommended a new formula that would increase payments to physicians by 2.5% next year (California Healthline, 1/22).
Meanwhile, HHS Secretary Tommy Thompson yesterday responded to concerns about Medicare provider reimbursements at a Senate Budget Committee hearing. He told the committee that funds for a reimbursement increase were not included in President Bush's fiscal year 2003 budget proposal because the administration "had to make some tough choices." Noting that Congress is expected to review Medicare payments for doctors, Thompson said, "It's important if we look at prospective payments for [physicians] that we look at prospective payments for all providers" (Fulton, CongressDaily, 2/14). For more about Thompson's testimony to the Budget Committee, see story #99.
Speaking at the House hearing, Ted Lewers, an American Medical Association trustee, said that doctors have begun reducing the number of Medicare beneficiaries that they treat in part as a result of reduced reimbursements. He added that Medicare should not base reimbursements for doctors on "changes in the economy as a whole." Lewers said, "There is no relationship between GDP and disease. The medical needs of Medicare beneficiaries do not wane when the country falls into recession" (Rovner, CongressDaily, 2/14). Lawmakers also expressed concern that the reduction in Medicare reimbursements to physicians will hurt seniors "as physicians become reluctant to take on" Medicare beneficiaries. Rep. Sherrod Brown (D-Ohio) said, "We have a responsibility to the beneficiaries who depend on Medicare and to the health care professionals who make the program work to stop the 2002 cut in its tracks. It's going to be expensive but it's got to be done" (AP/Las Vegas Sun, 2/15). Rep. Charlie Norwood (R-Ga.), a dentist, added, "Providers are simply going to walk away from Medicare. They can't continue to treat patients if it costs them money" (CongressDaily, 2/14). House and Senate lawmakers have proposed legislation to restore Medicare reimbursements for doctors. The legislation would cost about $1.2 billion, according to congressional officials (AP/Las Vegas Sun, 2/14).
A trade group representing the home health care industry, which faces a scheduled 15% cut in Medicare reimbursements in October, said that in his testimony to the House yesterday Scully "misstated" the economic health of the industry, CongressDaily/AM reports. Scully said, "Home health spending went up 40%" in fiscal year 2002. But a statement from the National Association for Home Care said that more than one-third of the industry's spending increases resulted from a shift from a 30-day billing cycle to a 60-day billing cycle, making fiscal year 2001 payments appear "artificially low." In addition, NAHC said that portions of the increase are due to a "temporary payment boost" to rural areas and "modest recovery" from cuts necessitated by the 1997 Balanced Budget Act. The statement said, "The bottom line is that home care cannot withstand additional cuts of any magnitude" (Rovner, CongressDaily/AM, 2/15).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.