To hear provider groups talk, you'd guess the entire U.S. healthcare system was on the verge of collapse because of the payment restraints enacted in the Balanced Budget Act of 1997.
But senior citizens' groups aren't buying that line. Instead, they are expressing skepticism about providers' ongoing campaign to persuade lawmakers to increase their payments.
The seniors' groups, whose members would lose access to needed healthcare services if providers were forced to close shop, said they have not seen any evidence that the budget law has resulted or will result in reduced access.
While the American Hospital Association this week is set to unveil a new analysis that purports to show that hospitals are suffering under the 1997 payment policies, beneficiary groups said they are awaiting more persuasive data before backing the providers' Capitol Hill lobbying blitz.
"The cries of pain heard in the boardroom haven't translated yet-and may never-into delivery of patient care," said John Rother, legislative director at the American Association of Retired Persons, which, with 32 million members, is one of the most powerful lobbies in Washington.
"We're taking a wait-and-see approach," Rother said.
"It's always hard to sort out where various providers are crying wolf and making claims that are aimed at padding their pocketbooks as opposed to (raising concerns about) access," said Ron Pollack, executive director of the healthcare consumers group Families USA.
It's also unclear whether the problems of ailing providers are the result of reduced Medicare payments or poor business decisions, added Howard Bedlin, vice president of public policy and advocacy at the National Council on the Aging.
But he affirmed what other beneficiary groups have said about the need for payment increases: "We have not been hearing a great hue and cry from members."
That's a sentiment shared by some congressional Democrats.
"We're not hearing from real people. We're hearing from people who are having trouble paying for a second Mercedes," said a House Democratic aide, who asked not to be identified. "This is the dog that wouldn't bark."
The aide said a draft report from the General Accounting Office, Congress' investigational arm, shows that beneficiaries have not seen reduced access to home health services as a result of the reform of Medicare payments for home health services.
Likewise, the payment restraints imposed on hospitals under the Balanced Budget Act are not significantly more extreme than those decreed in the past (See chart, p. 2).
Over its five-year lifespan, the budget law sets Medicare inpatient payment updates at a level lower than the hospital inflation rate known as the marketbasket index, with subtractions from the index ranging from 2.7 percentage points in 1998 to 1.1 percentage points in 2001 and 2002. This year, the reduction was 1.9 percentage points.
But since the prospective payment system was imposed in fiscal 1984, the payment update has exceeded the marketbasket index only once, in 1985. The most ever trimmed from the inflation rate was 3.8 percentage points, in 1986. The gap has exceeded 1 percentage point in 12 of the 16 years the PPS has been in place and the current 1.9 percentage point in seven of the 16 years.
Without seniors on board, hospital groups said they may have a tougher time persuading Congress that their payments need to be increased.
"It would help us a lot-no question" if the AARP and others came on board, said Thomas Scully, president and chief executive officer of the Federation of American Health Systems, which represents for-profit hospitals.
"I don't think they've seen any compelling evidence," Scully said. "I personally think they're going to see that in six months."
But the seniors' resistance may presage a bigger lobbying battle later this year as Congress begins consideration of how to reform Medicare reimbursement formulas and benefits.
Any increase in provider payments would come from the federal budget surplus, now estimated at $111 billion for this year. But seniors' groups would like the federal government to use the surplus to finance an outpatient prescription drug benefit. Seniors don't want to jeopardize that money by supporting changes in Medicare payment policies, provider lobbyists contend.
President Clinton, meanwhile, has pledged $700 billion of surplus dollars over 15 years to strengthen the Medicare Hospital Insurance Trust Fund, but has not pledged the use of the surplus for a prescription drug benefit. Clinton has come out in favor of the drug benefit, however.
Pollack believes the beneficiary groups would fight more to use surplus revenues to shore up the trust fund, now expected to go broke in 2015, than for a prescription drug benefit.