How Medicare Reform Could Affect YOU
Congress wants to revamp Medicare. Changes will present you with new challenges.
BY CEIL SINNEX

The images are all too familiar: aging laborers doomed to work until they drop in order to keep health insurance that pays for drugs. Busloads of gray-haired Americans crossing the Canadian border for less-expensive drugs. Families strapped by catastrophic medication expenses.

All because Medicare doesn't include a provision for prescription drug coverage.

The senior citizens' mega-lobby, the AARP, has made the issue its number one priority. President George W. Bush has issued a call for Medicare to cover drugs. The House and Senate passed separate and differing bills, H.R. 1 and S. 1, respectively, to achieve the monumental change. S. 1 was then incorporated into H.R. 1., and a bipartisan conference committee of Senate and House members was appointed to hammer out an agreement.

Sound simple? In classic Washington style, the legislation is about a great deal more than just prescription drug coverage. H.R. 1 contains so many measures unrelated to the drug benefit that it can be considered, in Capitol Hill parlance, a "Christmas tree bill," hung with many ornaments.

Then there is the mind-boggling expense. The Congressional Budget Office (CBO) estimates the House version would increase federal direct spending from 2004 to 2013 by $405 billion over the spending called for by current law, and that the Senate version would boost spending by $421 billion.

The conferees in September announced a bipartisan agreement on hundreds of pages of the legislation. Congressional committee sources say that much work remains to craft the final measure, which must then be adopted by the full Senate and House before it can be sent to the president. Bush and physician organizations continue to lobby the conferees.

Some version of what may prove to be an overall Medicare reform bill is likely to be signed into law by the end of the year. Private-practice physicians are sure to be directly affected by the pending legislation.

In this article, I'll examine three issues included in this landmark Medicare reform effort that are of major concern to private-practice ophthalmologists, and provide some insights into how they may be resolved.

Physician Fee Update

Physician reimbursement is the easiest-to-understand matter at stake.

"For us, the biggest issue is that the House version (of the Medicare reform bill) includes a positive 'fee fix' for 2004 and 2005," says Catherine G. Cohen, American Academy of Ophthalmology vice president for governmental affairs. "The Academy is lobbying all members to apply pressure to the conferees to be sure this is addressed."

The House version includes increases of not less than 1.5% for each of those years. Such updates would nullify a painful 4.2% cut in physician fees projected for 2004, the latest blow in a general downward spiral during recent years.

"We understand the limitations of this 2-year fix," William Rich III, M.D., Academy secretary for federal affairs, pointed out in a letter to leading members of the House Ways and Means Committee.

The Senate bill doesn't specify positive physician fee updates, but does include a "sense of the Senate resolution" noting the necessity of resolving physician payment issues that threaten seniors' access to care.

If the conferees keep the positive updates in the legislation, the effect will be to buy time for physician organizations to step up the pressure for Congress to resolve -- rather than just tinker with -- the root cause of the recent cuts: a flawed formula based on the "sustainable growth rate" (SGR), which ties physician reimbursement to the performance of the overall U.S. economy.

The American Medical Association (AMA) applauded the passage of the House bill in a statement by Yank D. Coble Jr., M.D., immediate past president.

"The physician payment provision averts a Medicare meltdown by reversing the cuts predicted for 2004 and 2005 due to the flawed Medicare payment formula," Dr. Coble said. He also praised the Senate bill for its prescription-drug benefit and other measures, adding that the AMA would work with Congress to ensure that the House bill's fee fix is included in the final legislation.

In light of Congress' last-minute fee fix that saved physicians from a cut in reimbursement in 2003, how likely is is that lawmakers will adopt new fee fixes for the next two years?

"I think there's a reasonable chance they'll do it," says Gary C. Brown, M.D., M.B.A., a Philadelphia ophthalmologist. "It depends on whether they think that if they don't, access to care will be damaged."

The fee fix in the House version suggests there's sentiment in Congress to continue to help physicians, suggests Christin Tinsworth, a majority (Republican) staff member for the House Ways and Means Committee.

Electronic Prescribing

Contending that it will prevent medication errors and improve patient safety, the conferees have agreed to phase in standards for electronic prescribing, but haven't yet decided whether to make such standards mandatory in 2008 for health professionals participating in Medicare. Physician organizations continue to oppose making this measure mandatory.

Michael D. Maves, M.D., M.B.A., in an AMA letter sent to Senate conferees, called for the conference to ensure that the final legislation doesn't contain a mandatory electronic prescribing requirement or "an unfunded mandate on physicians."

Mandatory electronic prescribing would foist onto physician offices huge expenditures for connection to high-speed Internet systems, software, hardware, maintenance and training, and "the diversion of physician time away from patient care," according to Dr. Maves.

David S.C. Pao, M.D., a Pennsylvania ophthalmologist, says the idea presents logistical problems.

"Electronic prescribing is not going to work because you can't do it while you're with the patient," Dr. Pao says. "You can't do it unless you have a terminal in the exam room, and even if you did, you do not know the name and e-mail address of the pharmacy where the patient wants to pick up the prescription."

Dr. Pao says he has a technician/scribe accompany him in examinations. "While I do the exam, I dictate to the scribe. Everything is written down, and the patient picks up the prescription at the reception desk."

Privatizing Medicare

President Bush's major imprint on the Medicare reform proposal is his plan to encourage private insurance companies to compete with Medicare, to a considerably greater extent than they already do under the Medicare+ Choice program.

Both House and Senate versions of the Medicare reform bill allow beneficiaries to choose between traditional fee-for-service Medicare and private plans. The House version takes a radical departure from the Senate's by establishing a program of competition between traditional fee-for-service Medicare and private plans called "premium support," in which beneficiaries would be provided with a subsidy to pay for private plans. The House bill also launches tax-protected "health savings accounts."

The Senate bill calls for a "fallback" program through which the government would provide the new drug benefit to beneficiaries even if no private plan were available in their geographic area.

Among the highlights of the House version:

► Medicare+Choice, an unpopular and arguably unsuccessful Bush-administration program to attract beneficiaries into HMOs, would be revamped and renamed Medicare Advantage.

► Insurance plans would competitively bid against Medicare Advantage rates in 2006.

► The Centers for Medicare and Medicaid Services (CMS) estimates that 48% of beneficiaries would enroll in private plans under the House version, but the CBO projects only 11% private-plan enrollment under the House bill and 9% under the Senate version. It's too soon to predict whether, or how, the level of enrollment would affect physicians because so many other issues are at play.

► Beneficiaries in traditional Medicare would be unaffected in 2006.

► PPOs (preferred-provider organizations) would bid to offer the standard Medicare benefit package in each of 10 newly defined regions.

► In 2010, reform said to be patterned after the Federal Employees Health Benefits Program (FEHBP) would begin.

The net effect?

Medicare Advantage would be similar to Medicare + Choice except that it would be adequately funded and require participating plans to provide "disease management," according to House Ways and Means Committee staffer Tinsworth.

The FEHBP has for decades drawn praise for cost-effective management and for the large number of health-plan choices offered. For example, some federal employees may choose from as many as 23 plans. Choices cover the gamut, encompassing national health plans, HMOs, PPOs and fee-for-service plans.

Choices or Chaos?

But would the current reform effort really make Medicare over into the FEHPB's shining image?

Tinsworth says yes.

"This program gives seniors more control over their own health care, and the competition that would come from seniors having real choices should reduce cost to Medicare over time -- thus saving Medicare from going into the red in 2013, as is now projected," says Tinsworth.

But critics say the House privatization proposals could lead to "cherry picking" of healthier seniors by private insurers, leaving traditional Medicare with the sickest.

"In the most pejorative terms, you might call it a voucher system," says Pat Bousliman, a Senate Finance Committee minority (Democrat) staff member. "Seniors would be given a set amount of money to buy insurance. Senator (Max) Baucus (D-Mont.) is skeptical of the impact of 'premium support.' If you leave the sicker folks in Medicare, premiums are sure to rise. This might impact the beneficiaries."

How would giving the insurance industry a major role in Medicare affect private-practice physicians?

"It's hard to predict, when you turn it over to the private sector," says Bousliman. "When you don't like what the government is paying you, you can lobby Congress. But what if the managed care industry tells you they're cutting your fees? It might be harder to turn it around. You can't lobby the insurance industry."

Dr. Pao says the current incarnation, Medicare+Choice, pays lower fees to ophthalmologists for office visits -- although more for surgery -- than does traditional Medicare, at least in southeastern Pennsylvania. His objections to the current program go deeper, however, to what he calls "the hassle factor" and to the HMOs occasional withholding or delay of care.

"One time a patient wanted to see me, and her HMO primary care provider refused to refer her," says Dr. Pao. "She saw a different doctor, and he gave the referral. It turned out that she needed a carotid artery endarterectomy."

Of the House bill's provisions to increase private-sector involvement in Medicare, Dr. Pao says: "It's an attempt (by some members of Congress) to wash their hands of responsibility and save money. It's terrible."

For some observers, the taint of the oft-criticized Medicare+Choice program casts a dark shadow over the House version.

"I'm not a big fan of Medicare+Choice," says Dr. Brown. "Essentially, what Congress is trying to do is get the insurers to leverage the providers by adding benefits that the providers can't afford to deliver. They're trying to get more services for less money."

Even with year-by-year fee fixes such as those included in the House bill, Dr. Brown expects a continuing effort to reduce payments to physicians.

The AMA, on the other hand, favors a private-sector approach.

"For the long term, the AMA believes that the current Medicare program should be replaced with a self-funded, private-sector approach to financing health care for the elderly," the organization says in an official position statement. "The AMA also believes that the program's current emphasis on government control should be shifted toward a system of personal choice and an invigorated Medicare marketplace that fosters competitive pricing for covered medical services."

The Battle Goes On

A crystal ball would be required to know the fate of the pending Medicare legislation and its impact on physicians' rising costs and falling reimbursement. One thing seems certain, though: The battle goes on against declining fees and rising costs. For the foreseeable future, ophthalmologists should keep their combat boots on.

Ceil Sinnex is a Washington-based journalist with a special interest in health topics.