Three health care reimbursement developments of interest in the last few days:
- On March 1, MedPAC, the Medicare Payment Assessment Commission, issued its annual Report to Congress on Medicare Payment Policy (PDF). I’m going through the 380-page report, and will discuss its most important findings and recommendations in my next post;
- President Barack Obama has brought the ongoing and interminable partisan debate on healthcare reform to what looks like a real decision point. He is scheduled to reveal his final effort to achieve some bipartisan support pretty much as I write and seems committed to push forward via the reconciliation process come what may; and
- Between Feb. 26 and March 2, Congress showed the country exactly why it is incompetent, by both structure and character, to play a positive role in assuring adequate and rationally managed reimbursement under Medicare. The situation would be funny if the stakes weren’t so high.
Three health care reimbursement developments of interest in the last few days:
- On March 1, MedPAC, the Medicare Payment Assessment Commission, issued its annual Report to Congress on Medicare Payment Policy (PDF). I’m going through the 380-page report, and will discuss its most important findings and recommendations in my next post;
- President Barack Obama has brought the ongoing and interminable partisan debate on healthcare reform to what looks like a real decision point. He is scheduled to reveal his final effort to achieve some bipartisan support pretty much as I write and seems committed to push forward via the reconciliation process come what may; and
- Between Feb. 26 and March 2, Congress showed the country exactly why it is incompetent, by both structure and character, to play a positive role in assuring adequate and rationally managed reimbursement under Medicare. The situation would be funny if the stakes weren’t so high.
On Feb. 26, the Senate failed to pass emergency legislation, already approved by the House, which would (among other things) have extended unemployment benefits and prevented implementation of a more than 21 percent reduction in Medicare payment rates to doctors. The legislation was deemed essential and non-controversial, supported by the leadership of both parties and virtually every member of the Senate — except for Sen. Jim Bunning (R-Ken.). He stood alone in refusing “unanimous consent,” a mechanism used frequently in the Senate to bring such legislation to the floor for a vote. As a result, numerous federal employees were technically furloughed, unemployment compensation ran out for thousands of needy families, and Medicare physician payment was cut dramatically.
None of those destructive things actually happened, of course. By late on Tuesday, Feb. 2, Bunning had relented, under extraordinary pressure from colleagues on both sides of the aisle, and the bill was passed. Perhaps he came to realize that the episode was tarnishing an already not particularly shiny legacy (Bunning’s term expires in 2010 and he won’t be running for re-election; the Kentucky Republican party, including Senate Minority Leader Mitch McConnell, forced him out because of his low state-wide popularity and, most likely, his frequent non-Senatorial comportment). But Senate work on everything else was delayed for five days, potentially affected federal workers and unemployed families suffered real distress, Medicare incurred substantial administrative costs and payments to physicians were suspended temporarily pending the resolution. It is frankly embarrassing that this is the way things happen in the self-styled “World’s Greatest Deliberative Body.”
Now, I’ve disliked Jim Bunning intensely since July 20, 1958, when he pitched a no-hitter for the Detroit Tigers against the Boston Red Sox and I’ve followed his political career with a mixture of amazement and disgust that people actually voted for him. His arbitrary, capricious and vindictive motivation in this case, along with his disregard for traditional senatorial courtesies, earns him further opprobrium. But let us not forget the role of the Senate as institutional enabler of Bunning’s action. The Senate was famously viewed by the founders as designed to temper the excesses of democracy — to slow things down and make sure they were carefully considered. But that role, and the rules that evolved in support of that role, were designed for slower-moving times as well as for more temperate and principled debate than that which either party seems capable of today. The Senate needs rule changes to allow action including insuring only judicious use of the filibuster; we cannot any longer afford to ever allow the Senate to be hostage to the whims of the one or the few.
But rules reform won’t be enough. The Senate and the House both need an infusion of political will and character. This is evident nowhere as clearly as in Congress’s repeated failure to deal with pressing Medicare reimbursement issues. The present physician payment problem is exhibit one for the prosecution.
Physicians were facing a 21 percent reduction in Medicare payment rates because of congressionally mandated limits on total program physician payments. Concerned about the rapid increase in Medicare spending, but either unable or unwilling to act directly to affect the forces causing that spending to increase, Congress simply imposed a standard: physician payments could not in any year increase more than a calculated Sustainable Growth Rate. The SGR incorporates four factors: Inflation in physician’s costs; percent change in Medicare fee for service enrollment; any changes in benefit structure; and inflation-adjusted change in per capita gross domestic product. Absent from the formula is explicit incorporation of changes in volume and/or intensity of services per beneficiary, but such changes would in theory be financed by the GDP-based adjustment factor.
There is, of course, no real relationship between change in GDP/capita and change in Medicare services/beneficiary. In the last many years, service volume and intensity (read cost) have risen substantially faster than GDP/capita, resulting in the Centers for Medicare and Medicaid Services having to propose systemic reductions in physician payment levels by 3 percent to 5 percent per year in order to comply with the SGR limit. And if that were the end of the story, Congress’s use of the SGR limit to shift the heavy lifting in cost control to providers might have had some effect. But having evaded meaningful policy-making responsibility, Congress then proceeded to annually undermine its chosen cost-control mechanism and legislatively override the payment limits mandated by the SGR. Year by year, as the SGR formula proved to be unrealistic and politically untenable, Congress legislated an annual physician fee update unrelated to the SGR limit — but left the SGR rule unchanged. As a result, each subsequent year produced an increasingly large and unacceptable mandated limit that needed to be overridden, until we got to 2010 and 21 percent, an imbalance so absurd that only Sen. Bunning could imagine accepting it.
The example teaches us two things: Congress has demonstrated that it is incapable of designing policies to directly address pressing problems in healthcare reimbursement; and it doesn’t have the political courage to set standards and allow the incentives created by those standards to force behavior change. It is, on the other hand, perfectly competent to legislate good intentions, and to bend — with remarkable flexibility — to the political wind. Annual congressional micro-management of Medicare payment policies — the status quo — is a recipe for long-term disaster.
Edward Berger is a senior healthcare executive with more than 25 years of experience in medical device reimbursement analysis, planning and advocacy. He’s the founder of Larchmont Strategic Advisors and the vice president of the Medical Development Group. Check him out at Larchmont Strategic Advisors.