To listen to the hearty praise of groups like the American Medical Association, the $395 billion Medicare reform package is the best thing for physicians and their patients since penicillin.
In addition to helping seniors pay for their prescription drugs, the landmark law aids physicians by erasing a planned 4.5% reduction in Medicare payments this year that would have cost them $3 billion. That dramatic cutback, which could have prompted many physicians to abandon the program or limit new Medicare patients, was replaced with a 1.5% increase in physician payments in each of the next two years.
Donald Palmisano, the president of the American Medical Association, hails the measure as a "historic victory for Medicare patients and their physicians. This empowers patients."
Palmisano's tribute was echoed to varying degrees by the leaders of many other doctors' groups, including local and state medical groups, specialty societies and large national group-practice organizations like the Medical Group Management Association and the American Medical Group Association.
"The AMGA applauds Congress for passing this critical piece of legislation," says Donald Fisher, the association's president and chief executive officer.
Yet despite this high praise from most quarters, many physicians aren't exactly jumping for joy. The negligible increase of 1.5% this year, combined with estimates that doctors' overhead has jumped almost 8% in the last year or so, isn't particularly heartening news to physicians struggling to match last year's income. For many of these doctors, the outcome of the long, bitter legislative battle over Medicare reform has not been greeted with unbridled enthusiasm.
"It's a Band-Aid," says Bohn Allen, president-elect of the Texas Medical Association, the largest state medical association with about 38,000 members. "It sort of meets the goals of both the Texas Medical Association and the AMA. We would have really been in trouble with that 4.5% reduction.
"But if you're a doctor who's already experiencing financial problems, and you're having problems making ends meet, this bill will not save you."
Even William Jessee, president and CEO of the MGMA, which was generally supportive of the bill, says it may not be enough to stop many physicians from reconsidering their involvement in the federal entitlement program.
"My sense is that this will be enough to keep Medicare from having mass defections," he says. "But many physicians will continue to evaluate the impact of Medicare payments on their practices. And I think you'll continue to see a steady stream of doctors either limiting patients or opting out of Medicare."
Palmisano, who applauds most elements of the complicated bill, says doctors have not yet won a complete victory in their continuing struggle over Medicare payments. The AMA is now setting its sights on changing what he describes as an inequitable formula for establishing physician payments.
Jessee says the "first order of business" for Congress in January should be to "develop long-term improvements in the flawed" Medicare reimbursement system.
The new law, which won almost universal support in the medical community, also reduced geographic payment disparities and added about $700 million to maintain and enhance the physician supply in rural and under-served areas. Under the new law, federally qualified health centers will not be included under the prospective payment system for skilled-nursing facilities. These health centers will instead receive reimbursement of 100% of their reasonable costs under the Medicare Advantage program. In the past, these health centers were reimbursed at no more than 80% of their reasonable costs.
Palmisano and other officials at doctors' organizations also lauded the bill's regulatory relief provisions. Among other things, the new law features due-process protections for physicians during Medicare audits, including deferral of any financial penalties until all appeals are exhausted. It also provides physicians with an opportunity to correct errors before repayment demands are made. There is no way to quantify the financial impact on physicians of the regulatory changes, one AMA official said.
The Medicare bill triggered complaints in some quarters of the medical community. Currently, the government pays 95% of injected treatments like chemotherapy that are administered at doctors' offices. Under the new law, the government will pay physicians 85% of the average wholesale price of drugs in 2004, and switch to average sales price in 2005. To help offset reductions in drug prices, the bill provides a transitional increase in reimbursements for medical practice expenses. Total payments to oncologists and hematologists are expected to jump from $300 million this year to $600 million in 2004. But critics of the provision say that the increase in practice expenses is not nearly enough to compensate for the cut in drug prices-the size of which is still not known.