While many of you were living it up vacationing in exotic locales, I spent countless hours during Congress' August recess reading through the Balanced Budget Act of 1997. It contains thousands of provisions, some good, some not so good. Here are a few favorites deserving of awards.
The Seemed Like a Good Idea on Paper Award. This one goes to the competitive-bidding demonstration project for managed-care plans. The bill calls on HCFA to choose seven sites for the project. Health plans would submit bids and HCFA would choose a monthly reimbursement rate from the bids. HCFA has tried to implement a similar program twice already, only to have it killed by local plans. Like traffic laws and user fees, everybody loves competition until forced to compete.
Runner-up: Medicare private fee-for-service plans.
The What Do You Mean Golf Clubs Aren't Medically Necessary Award. Remember when Empire Blue Cross and Blue Shield was accused of counting an array of outrageous executive perks as healthcare costs? The new budget has a section titled "Prohibiting Unnecessary and Wasteful Medicare Payments for Certain Items." According to the section, Congress has found the following items to be unrelated to patient care and therefore not reimbursable by Medicare: tickets to sporting events, the personal use of motor vehicles, education expenses for children or spouses, and fines from violating state or federal laws. However, children using motor vehicles is not listed.
The Brady Bunch PSO Award. A provision in the budget reduces the minimum enrollment requirement for provider-sponsored organizations in rural areas to 500 enrollees. Heck, why not cut the requirement to a large family and let the Waltons open their own PSO. As private insurers know, you must have a large pool to spread risk. With only 500 members, a few really sick patients could create financial hardship.
The Ira Magaziner Would Love This System Award. This one goes to the new framework allowing PSOs to contract with Medicare. Remember how simple Ira was going to make the healthcare system? It's hard to say whether providers ultimately will be able to take advantage of the new PSO rules because they are so vaguely written and call for so many regulations that even those who wrote them aren't completely sure what it all means.
Runner-up: The new Medicare reimbursement mechanism for PPS-exempt hospitals.
The Maybe They Will Pay Me Not to Write This Column Anymore Award. The budget expands to all 50 states the New York program that pays teaching hospitals to reduce their resident counts. Sure, it saves money over the long run, but not as much as caps on the number of residents would.
The Punt on Third Down Award. Congress has created a 17-member National Bipartisan Commission on the Future of Medicare. What revelations will this commission uncover about saving Medicare that aren't already known? Question: How many commissioners does it take to change a light bulb? Answer: All of them. That way if it burns out no one gets the blame.
Runner-up: The PSO solvency standards.
The Welcome to the 1990s Award. This goes to a provision eliminating the $150 million cap on tax-exempt bonds for hospitals. What took so long? Not-for-profits have been complaining for years that the bond cap hinders their ability to form integrated networks. Let's face it, $150 million barely gets you a parking lot anymore.
The Euphemism Award. Under new "inherent reasonableness" rules, HCFA is allowed to cut Medicare reimbursements when they are deemed "grossly excessive." One man's inherent reasonableness is another man's draconian payment cut. Congress limited the cuts to 15% a year. That should make the durable medical equipment industry, which was originally going to see 40% cuts, rest easy at night.
Runner-up: "Maintaining savings from temporary reduction in capital payments for PPS hospitals."
Second runner-up: "Sustainable growth rates" for physician Medicare reimbursements.
The You Get What You Pay For Award. Congress eliminated the rule that reimburses chiropractors under Medicare only when an X-ray showed spinal manipulation was necessary. Have you ever wondered why the chiropractors have one of the largest political action committees around?
The You Don't Necessarily Get What You Pay For Award. The American Academy of Ophthalmology made about $900,000 in campaign contributions during the last election cycle. That ranked it fifth among health groups, right behind the American Hospital Association. What did this generosity achieve? The budget bill will cut payments to ophthalmologists by about $175 million in 1998 because of an overhaul of the way physicians are reimbursed by Medicare for practice expenses. You don't need 20/20 vision to see that something went horribly wrong for the ophthalmologists.
The How to Do Surgery With an Ax Award. The changes made to hospital transfer policy reduce inpatient payments when a patient is transferred to a post-acute setting for a group of 10 diagnoses. No doubt some hospitals are double-dipping by collecting a Medicare inpatient DRG payment and then collecting cost-based reimbursement for the post-acute stay. But the solution injects some strange incentives into the system, such as rewarding hospitals for holding onto patients.
Runner-up: Reducing Medicare reimbursements for hospital bad debt.
The Flying Solo Award. Under current law, nurse practitioners and clinical nurse specialists can receive Medicare reimbursements only in rural areas. The budget bill changes the rules to allow all nurse practitioners and clinical nurse specialists to be paid directly by Medicare, even when a doctor is not present. By the way, the American Nurses Association was the third most generous PAC during the last election cycle.