While doctors may be cheering President Clinton's plan to strengthen Medicare, including the addition of payments toward medication costs, they also are worried that an increase in benefits will come at their expense.
"I'm for the medication benefit . . . , but there's not a realistic plan in place for how to pay for it," says George Isham, M.D., medical director of HealthPartners in Minneapolis. "They're counting on budget surpluses as far as the eye can see and cost reductions that I think will fall heavily on doctors."
Jack Evjy, an oncologist in Methuen, Mass., and president of the Massachusetts Medical Society, also supports the idea of implementing a benefit for drugs.
"Many patients (for whom doctors) prescribe drugs can't afford to buy them, and then disaster befalls," Evjy says. On the other hand, he says, if medication benefits are implemented, providers and hospitals will see additional cuts.
The president's proposal, released July 2, seeks to make Medicare more efficient by adopting private-sector purchasing tools and constraining spending. It anticipates reducing provider payment growth by $39 billion between 2000 and 2009. The plan appears to be purposefully vague with no specific numbers for each year. However, it does specify the use of 15% of the federal surplus, or $794 billion, over 15 years.
Major physician associations have yet to say much about the plan, pending further details. A statement from the American Medical Association said it was pleased the president wants to strengthen Medicare financing and address gaps in coverage with a drug benefit, and that it is looking forward to reviewing specifics of the plan.
"Given the lack of concrete details, it's hard to generalize what impact the proposed changes will have on physicians," says Robert Doherty, senior vice president of governmental affairs at the American College of Physicians-American Society of Internal Medicine in Washington. Isham agrees. "I think it's a legitimate criticism that (the proposal) is not rich enough in detail," he says.
Healthcare providers are already under the gun from the Balanced Budget Act of 1997, which by 2002 will cut federal spending growth by $115 billion through lower Medicare reimbursement to hospitals and doctors. New curbs in reimbursement undoubtedly will push provider groups to ratchet up their lobbying efforts even further.
Among the items addressed in the plan is a proposal for Medicare to use competitive pricing and selective contracting, to negotiate payment rates in exchange for flexible administrative arrangements and to negotiate bundled payments for related services.
For example, the plan suggests the use of competitive bidding and price negotiations to set payment rates for Medicare Part B items and services, except for physician services. It gives Medicare authority to select both the items and services as well as the geographic area to be included in a specific bidding or negotiation. Selection would be based on the availability of providers and savings potential.
In addition, Medicare would be allowed to negotiate flexible administrative arrangements -- such as simplifying claims processing and reducing bill-payment cycle times -- with providers that offer discounts or demonstrate efficient performance and high quality care. Under the plan, Medicare would pay a single amount per case for all services at one site of care, regardless of the number of care-givers and suppliers involved. Such a group might include a hospital, a surgeon, anesthesiologist and attending physician. Combining payments in this way would save administrative costs.
Another proposal is to establish a Medicare fee-for-service PPO option. Rather than create its own PPO, HCFA would contract with existing PPOs that demonstrate the ability to meet unspecified quality and utilization management standards. One qualifier would be an assessment of claims and quality-of-care histories.
Only applicants with a demonstrated history of undefined "cost-effective medical practice patterns" would be eligible to be preferred providers. The plan doesn't specify the cost of premiums for beneficiaries in approved PPOs; nor is it clear whether HCFA or the private PPO would decide if a physician meets the criteria to be accepted into the PPO program, Doherty says.
"I think the concern that many physicians have is that (the PPO plan) could get the federal government in the business of economic credentialing," Doherty says. Some doctors might be unfairly excluded from joining because whichever entity does the assessment might not take into account case mix when it grades providers for cost effectiveness, he says.
Another plank in Clinton's proposal would expand the scope of the Centers of Excellence demonstration by allowing centers to provide incentives such as reducing or waiving cost sharing, offering private rooms and paying for travel and lodging to attract more beneficiaries. The plan also grants the demonstration permanent status.
According to the plan, as of 2001 HCFA would pay selected facilities a single rate for some or all services related to certain surgical procedures and medical conditions. Coronary artery bypass surgery and other heart-related procedures, knee replacement surgery and hip replacement surgery are first on the list for reimbursement. The plan also specifies that the single rate paid could not exceed the aggregate amount that otherwise would be collected.
To qualify as a Center of Excellence, facilities would have to meet quality standards and implement a government-sanctioned quality improvement plan. The Center of Excellence designation would last three years, provided quality standards were upheld.
The possible expansion of the centers raises concern that HCFA may dole out designations based "more on price than quality," Doherty says.
From a provider point of view, a more positive proposal in the plan would pay primary-care physicians for unspecified case-management services. "This could be very rewarding for what (doctors are) doing anyway," Doherty says.
However, some specialists may be worried that the case-management model could evolve into a gatekeeper system, he says, in which the primary-care physicians have control.
Another proposal affecting physicians would authorize a demonstration of bonus payments for group practices, which would be expanded nationwide if it proves to be successful. Practices that qualify would be offered bonus payments for reducing excessive use of their services and for "positive medical outcomes."
Qualifying groups would be given annual per-capita targets. Bonuses would be paid if expenditures in the performance year are lower than the target.
The president's plan is not the only proposal in the works intended to improve healthcare for the elderly. Legislators on Capitol Hill, members of the National Bipartisan Commission on the Future of Medicare and others also have ideas of their own. Moreover, there isn't a lot of time to move forward on any plan as Congress wants an August recess and an adjournment in October. And given that 2000 is an election year, it's unclear what, if anything, will have a chance to develop that could put Medicare on more solid ground.
Trade-offMedicare proposal: key points for physicians
- Allows for competitive pricing and selective contracting
- Allows for negotiating payment rates in exchange for flexible administrative arrangements and negotiating bundled payments for related services
- Seeks provider savings of $39 billion from 2000-2009
- Creates a Medicare preferred-provider option, under which Medicare would contract with existing PPOs
- Expands the scope of Centers of Excellence demonstration and grants it permanent status
- Encourages case management by contract with primary care physicians
- Authorizes demonstration of bonus payments for group practices and, if successful, the expansion of the demonstration nationwide