Hospitals and physicians are vying for victim status as the ax dangles over their Medicare payments again.
Contending that they are easier targets than physicians, hospitals say they also take bigger cuts because they receive more Medicare money.
"Historically, the government goes where the money is, like bank robbers do," said Thomas Scully, president of the Federation of American Health Systems, which represents for-profit hospitals.
Hospitals receive roughly 50% of all Medicare payments, or an estimated $108 billion in fiscal 1998, for inpatient or outpatient services, with most dollars going to inpatient care, according to the Congressional Budget Office.
By comparison, physicians receive 15% of Medicare payments, or $32.6 billion.
Physicians say the 1997 budget law put a permanent squeeze on them. That law set up a system that relies on a "sustainable growth rate" calculation to determine annual payment adjustments.
"There certainly are times we feel we've been singled out," said a spokeswoman for the American Academy of Family Physicians.
The budget law that Congress passed in 1997 will reduce projected Medicare outlays by $191.5 billion through 2002, according to the CBO. That included a freeze on hospital Medicare inpatient payment rates for fiscal 1998.
Most recently, in President Clinton's 2000 budget, he proposed a number of tweaks in Medicare hospital payments over the next five years (See chart).
If Congress wants to trim Medicare payments, the biggest target is the biggest single Medicare expense: hospital inpatient costs. Cutting 1% there would save the government more money than cutting 1% on physician reimbursement, hospital groups said.
"If you want to save $1 billion on the physicians' side, because physicians are paid specialty by specialty, you have to pick a fight with a bunch of different constituencies," Scully said. "The hospitals are an easier political fight."
Jack Bresch, director of legislative affairs at the St. Louis-based Catholic Health Association, said the hospital industry has only itself to blame for the steep cuts.
"Hospitals don't really have political clout," Bresch said. "The political influence of the hospital community, of which we are a part, needs to be more persuasive and productive."
Physicians argue the sustainable growth rate system has already hurt them and could harm them even more in the near future.
Unlike hospitals, physicians who cry to Congress are talking about their personal incomes-a plea that legislators are more likely to consider.
HCFA calculates the sustainable growth rate based on the estimated growth in the U.S. gross domestic product and the increase in fee-for-service beneficiaries, among other factors.
The problem, physician groups said, is that HCFA's projections are not always accurate, and HCFA claims it lacks the authority to correct them.
Because of HCFA's failure to correct last year's projection error, the Medicare physician fee schedule shrank by $645 million, an American Medical Association spokeswoman said.
"The premise that hospitals have taken deeper cuts isn't right," the AMA spokeswoman said. "Congress doesn't have to legislate new (physician) cuts every year. We're on cruise control."
That means that unlike hospitals, physicians can no longer defend themselves against Medicare cuts each year. Any increase or decrease is automatically calculated, the AMA spokeswoman said.
"Next time we could be underfunded by a couple of billion dollars," she said.
Hospitals and physicians are often in the same boat when cuts come down, said Richard Pollack, the American Hospital Association's executive vice president and director of government and public affairs.
"Whether it's them or us, we're all together," Pollack said, referring to the business partnerships between physicians and hospitals. "It affects us both."