Providers gave thumbs up last week to a federal commission's proposal to change Medicare to a defined contribution plan whereby the government would pay a flat fee directly to health plans. But those providers weren't as enthusiastic about other proposals.
The 17-member National Bipartisan Commission on the Future of Medicare met last week in Washington to discuss the proposals and will meet again later this month.
The commission chairman, Sen. John Breaux (D-La.), said last week that he would unveil a Medicare reform proposal under which Medicare would pay a flat amount directly to a health plan for each beneficiary. The payment would be sufficient to purchase a basic package of benefits, and seniors could choose from managed-care options.
If beneficiaries chose a plan that cost more than the government contribution, they would pay out of pocket the difference between the HCFA contribution and the plan premium.
The commission calls this idea "premium support," and it resembles the current Federal Employees Health Benefits Program.
Provider groups last week supported the proposal but cautioned that the final details could change everything.
"(Hospitals) are being squeezed by managed care, and the idea of encouraging more managed care is of concern," said Thomas Scully, president of the Federation of American Health Systems, whose own Medicare reform plan includes a proposal similar to the commission's. "But if you look at the alternative-a rate-setting system that doesn't work-this is the least dangerous of bad alternatives."
According to Breaux and the commission's administrative chairman, Rep. William Thomas (R-Calif.), the package would also expand the Medicare drug benefit, although the men did not give details. Medicare covers only limited pharmaceuticals related to inpatient procedures.
"Something to address seniors' drug needs is legitimate, but how it is paid for and the extent (to which) it can be done without damaging the existing program will be key," said Thomas Nickels, vice president of federal affairs at the American Hospital Association.
Breaux also said some commission members supported raising the Medicare eligibility rate to 67 from 65 over a 24-year period.
Providers strongly criticized a commission proposal to move about $11 billion in annual graduate medical education and disproportionate-share payments from Medicare entitlement spending to discretionary spending.
The entitlement label means the payments are guaranteed, although they fluctuate based on the number of discharges and the mix of patients. The discretionary label would mean the payments could be eliminated during federal budgeting.
"If payments get moved, I guarantee they're going to be gone," Scully said.
At last week's meeting, the commission debated reforms advocated by commission member Bruce Vladeck, a former HCFA administrator. Vladeck is now a professor of health policy at the Mount Sinai School of Medicine in New York.
Vladeck's reforms assume that the traditional fee-for-service Medicare program would be retained as an alternative to a premium support program. His changes would give more purchasing clout to HCFA by allowing the agency to act as a private insurer.