Once again, Congress puts off a tough decision on physician fees and shows the failure of top-down cost control. Obama-Care charts a similar path. When will Washington wise up? Amid the recent political game-playing over the payroll tax, the doctors' lobby was quietly at work on its annual task of persuading Congress not to cut Medicare payments.
As usual, the effort paid off. As it has every year since 2003, Congress agreed to the so-called doc fix, suspending a scheduled Medicare fee cut of 27.4%.
Of course, no sane member of the House or Senate was going to vote for a cut that huge. Doctors would have threatened to drop Medicare patients like hot potatoes, and lawmakers know better than to invite the wrath of seniors in an election year.
So the vote was a foregone conclusion. But if this year's doc fix wasn't exactly big news, it deserves attention for what it says about Medicare and the futility of current laws designed to hold its costs down.
The story behind the doc fix — and the reason the scheduled fee cut was so huge — is a 1997 law that set a "sustainable growth rate" (SGR) for Medicare doctor payments based on per-capita GDP.
Until 2002, payments rose more slowly than the SGR, but they've outstripped it since then. That's why the gap is now so big — and impossible to close all at once.
Suspending SGR each year takes an act of Congress. But it gets easier for doctors each year as the gap widens and the idea of closing it becomes more unthinkable.
In short, the 1997 scheme to make supposedly automatic cuts in doctor fees based on what looked like a reasonable index has totally failed. Everyone in Congress must have figured this out long ago.
But that didn't keep a majority (at the time) from setting up a similar top-down cost-cutting regime for Medicare when President Obama's health plan was enacted in 2010. That law created an Independent Payment Advisory Board (IPAB) to squeeze $480 billion out of Medicare and Medicaid spending over 12 years.
Overriding the IPAB cuts requires a three-fifths Senate vote, but things may not even have to get to that pass. Once doctors and seniors see what the IPAB is up to, they can press Congress to abolish it.
Sooner or later, Congress will have to try something different if it doesn't want to bankrupt Medicare or jack up taxes to keep the program afloat. A real alternative to top-down cost control is a system giving consumers influence over costs and rewards for keeping costs low.
Changes that give money or vouchers to individuals to buy competing coverage plans or for out-of-pocket payments embody this bottom-up principle. Even some Democrats are no longer afraid to entertain such ideas.
Earlier this month, Republican Rep. Paul Ryan and Democratic Sen. Ron Wyden teamed up on a plan to offer future Medicare beneficiaries the option of private insurance with limited premium subsidies.
That's a good start toward real reform. Such plans may sit on the shelf during a presidential election year. But there's always 2013, when America may have a new president and a Congress tired of playing games. http://tinyurl.com/6pcol8o
Here's what happens when the U.S. Congress decides to indulge its technocratic tendencies on a major aspect of the American health care system, physicians' Medicare payments, which since 1997 have been governed by the sustainable growth rate (SGR). Via The Washington Post: "It was adopted by Congress in 1997 almost as an afterthought — a new formula to keep Medicare spending on doctors from growing faster than the economy as a whole. "But like a snowball that swells in size as it rolls down a mountain, the rate-setting formula has transformed into a budget-busting juggernaut that will hit doctors with a 27.4 percent pay cut for their Medicare patients in January unless legislators step in. "The cost of congressional intervention has ballooned just as formidably: Postponing the cuts — the solution Congress has turned to every year since 2003 — would cost $21 billion for a one-year delay and $38.6 billion for two years. Fully repealing the formula would add nearly $300 billion to the deficit, according to the Congressional Budget Office." The formula has given us one of Washington's most enduring budget rituals, the "doc fix," in which Congress, despite being well aware that physicians are set for large cuts to their Medicare reimbursement rates, and despite having no intention of letting those cuts go through, waits until the very, very, very last minute, talks about the need to get rid of the SGR...and then passes yet another temporary override. Despite widespread agreement between Republicans, Democrats, and health providers that the system needs a permanent fix, Congress sticks to temporary patches because the total cost of a permanent fix would, at this point, run somewhere in the neighborhood of $300-400 billion dollars—money that no one in Congress wants to commit. Even when Democrats in Congress did manage to raise a trillion bucks to put toward health care (sort of), they spent it on expanding coverage through ObamaCare rather than on unbreaking the obviously cracked system we already had. Indeed, the delays just break the system further; every temporary override makes a permanent fix even more expensive. By 2014, it won't cost $300-400 billion. It'll cost closer to $600 billion. So each time Team Red and Team Blue team up to pass a temporary patch in order to avoid the pain of paying for a permanent fix, they end up making it even harder to pass a permanently paid-for solution down the road. It's a bipartisan feedback loop of fiscal stupidity. The doc fix is an object lesson in the ways that Washington does not work: Congress passes poorly designed plans—a complex payment formula that no one expected would ever cause physician payments to drop—and then when it dawns on legislators that their latest technocratic scheme isn't working as expected, they take half-measures to "fix" the problem that actually make it worse. This isn't an isolated case, either; it's not like Medicare was A-OK until Congress came along and screwed it up with the unsustainable growth rate. As I document in "Medicare Whac-a-Mole," my feature in Reason's latest print edition, the history of Medicare payment fixes, each intended to control exploding system costs by somehow fixing its payment system, is a history of technocratic folly, in which Congress and assorted health bureaucrats—not all of whom even knew much about the health care system they were tasked with managing—passed payment reform after payment reform, only to watch spending continue to grow faster than expected. This is why I'm even skeptical of the permanent fix proposals put forth by Medicare's resident bureauwonks, which would tweak the payment system to cut specialist payments and freeze primary care pay. Maybe the wonks and bureaucrats will get it right this time! Or, you know, maybe not. http://tinyurl.com/cbvyht3
A top advocate for reforming Medicare physician payments has been named to a bicameral panel charged with tackling the issue. House Minority Leader Nancy Pelosi (D-Calif.) on Friday named Rep. Allyson Schwartz (D-Pa.) to the House-Senate conference committee tasked with finding an agreement to extend payroll tax cuts and fix Medicare's Sustainable Growth Rate formula. Schwartz is the author of a detailed plan to overhaul the payment system. The panel was named after the House and Senate on Friday agreed to a two-month fix to avoid a 27.4 percent cut to physician payments scheduled for Jan. 1. Pelosi also named Reps. Sandy Levin (D-Mich.), Xavier Becerra (D-Calif.), Chris Van Hollen (D-Md.) and Henry Waxman (D-Calif.) to serve on the committee."I have always worked across the aisle to find common ground on the most important issues facing our nation," Schwartz said in a statement. "We need to put aside our differences in order to protect our economic recovery. I am honored to have been appointed to this joint committee and will work to prevent a tax increase on middle-class families and preserve the quality healthcare America's seniors deserve." Her proposal calls for a six-year transition period with fixed payment updates. After that, the Department of Health and Human Services would be tasked with coming up with at least four payment systems physicians could choose from, based on their location, patient mix and other factors. http://tinyurl.com/cq5mzj2
Nine expiring Medicare fee schedule provisions could cut annual payments to physicians and other health care professionals by about $2 billion starting in 2012. The House Ways and Means health subcommittee held a Sept. 21 hearing to debate whether Congress should renew the exceptions in Medicare's pay system, known as extenders. The expiring provisions would affect nearly all health professionals. "When these policies were created, many were billed as short-term or one-time payment adjustments," said Rep. Wally Herger (R, Calif.), the subcommittee chair. "However, Congress has extended most of them on an annual basis for the last decade." At the hearing, American Medical Association Board Chair Robert M. Wah, MD, spoke in favor of four of the extenders, but he also discussed the need for overall payment system reform. He said extending the payment provisions helps a flawed system limp along, but Congress needs to do more by eliminating the sustainable growth rate formula that helps calculate physician pay. The SGR is set to cut 2012 rates by 29.5%. "We have a lot of symptoms here we are treating, but we're not treating the underlying disease," he said. Congress should extend several expiring payment policies while it examines overhauling the entire system, Dr. Wah and representatives from other organizations said. Current law, for instance, requires Medicare to adjust payment rates for services on a geographic basis. The program typically adjusts physician pay on a budget-neutral basis, so increases for one geographic area would be offset with decreases in another locality. But in recent years, Congress has established a geographic physician work floor to prevent positive adjustments from negatively affecting pay in other areas. In addition to extending the work floor, Congress should continue a 5% pay increase for certain mental health services, allow for the direct billing of the technical component for pathology services and continue paying higher rates for bone density screenings for osteoporosis, Dr. Wah said. These four exemptions, which are scheduled to expire Jan. 1, 2012, would cost $800 million to extend for another year. http://tinyurl.com/3wze8cg
The Centers for Medicare & Medicaid Services (CMS) today announced a final rule reducing Medicare skilled nursing facility (SNF) Prospective Payment System (PPS) payments in FY 2012 by $3.87 billion, or 11.1 percent lower than payments for FY 2011. The FY 2012 rates correct for an unintended spike in payment levels and better align Medicare payments with costs. “CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care,” said CMS Administrator Donald Berwick, M.D. “Adjustments to payment rates for next year reflect that policy.” CMS is now recalibrating the case-mix indexes (CMIs) for FY 2012 to restore overall payments to their intended levels on a prospective basis. The SNF PPS uses a resource classification system known as Resource Utilization Groups Version 4 (RUG-IV), which assigns a patient to a RUG group to determine a daily payment rate. Each RUG group consists of CMIs that reflects a patient’s severity of illness and the services that a patient requires in the skilled nursing facility (SNF). In transitioning from the previous classification system to the new RUG-IV, CMS adjusted the CMIs for FY 2011 based on forecasted utilization under this new classification system to establish parity in overall payments. SNFs have been paid under RUG-IV since Oct. 1, 2010. CMS found that the parity adjustment made in FY 2011, which was intended to ensure that the new RUG-IV system would not change overall spending levels from the prior year, instead resulted in a significant increase in Medicare expenditures during FY 2011. This increase in spending was primarily due to shifts in the utilization of therapy modes under the new classification system differing significantly from the projections on which the original parity adjustment was based. “Additional data analyzed by CMS since publication of the proposed rule confirmed the extent of the overpayments that have occurred since implementation of the RUG-IV system,” said Jonathan Blum, deputy administrator and director of the Center for Medicare. “We are also making several improvements to our payment system to strengthen its integrity.” The FY 2012 recalibration of the CMIs will result in a reduction to skilled nursing facility payments of $4.47 billion or 12.6 percent. However, this reduction would be partially offset by the FY 2012 update to Medicare payments to skilled nursing facilities. The update — an increase of 1.7 percent or $600 million for FY 2012 — reflects a 2.7 percent increase in the prices of a “market basket” of goods and services reduced by a 1.0 percent multi-factor productivity (MFP) adjustment mandated by the Affordable Care Act. The combined MFP-adjusted market basket increase and the FY 2012 recalibration will yield a net reduction of $3.87 billion, or 11.1 percent. http://tinyurl.com/3o4r67u
A new device may be joining smartphones, iPads and music players that you have to charge overnight: electronic eyeglasses. These glasses have tiny batteries, microchips and assorted electronics to turn reading power on when you need it and off when you don’t. Traditionally, people who hit their 40s often need extra optical help as farsightedness sets in. They may buy bifocals or no-line progressive lenses. But such glasses have a drawback: the lenses that magnify fine print also blur objects more than an arm’s length away when a wearer looks down, distorting the view when on a staircase, for example, or when swinging at a golf ball. The new electronic spectacles, called emPower, are intended to handle that problem with an unusual insert in the bottom part of the lenses: liquid crystals, cousins to the familiar ones in television displays. The crystals change how the lenses refract or bend light, just as varying levels of thickness do in traditional glasses. To call up reading power in the new glasses, users touch the side of the frame. Batteries in the frame send along a current that changes the orientation of molecules in the crystals. Touch the side of the frame again, and the reading power disappears. Turn it off to hit a golf ball; turn it on to read the scorecard. The glasses, made by PixelOptics in Roanoke, Va., will be on the market this spring — first in Virginia and North Carolina, and later in the year nationally, said Dr. Ronald Blum, an optometrist and the company’s president. The estimated price, $1,000 to $1,200, will include frames, lenses, coatings and charger. http://tinyurl.com/4l2t5m5
Democrats are pouncing on a Republican plan to repeal the healthcare reform law, accusing Republicans of breaking their campaign promise to reduce the deficit.
Under new budget rules released by Republicans, the House could repeal the healthcare reform law without offsetting the $143 billion that the Congressional Budget Office (CBO) estimates it will shave from the deficit over 10 years.
The new rules allow the Budget Committee to “make appropriate budget adjustments” to account for the repeal of the reform law before adopting a fiscal 2012 budget plan, House aides explained.
“The new Republican majority in the House will hold a straight up-or-down vote on the full repeal of the entire healthcare law,” spokeswoman Megan Whittemore said.
The new Republican rules skirting “pay-go” requirements have the support of an influential Tea Party group, which suggested the strategy in a memo to Republican leaders earlier this month. In the memo, FreedomWorks said the deficit reduction provided by the reform law is “a small amount” and that the savings would “vanish” in the next CBO estimate.
FreedomWorks, led by former House Majority Leader Dick Armey (R-Texas), urged Republicans to keep the pay-for vote separate from a vote on full repeal of the reform law.
“Even if there is some residual ‘cost’ to full repeal under existing budget rules, you can (and we argue, you should) waive the relevant points order … on the ground that no one should have to pay to repeal an unconstitutional bill, especially one whose tax hikes and spending streams haven’t begun yet,” the group said.
House Speaker-designate John Boehner (R-Ohio) praised the new rules in a statement last Thursday.
“The rules package we have offered represents a first step towards delivering on the pledge Republicans made to address Americans’ top priorities: cutting spending, creating jobs and reforming the way Washington works,” he said. http://tinyurl.com/3523wvb
Many Democrats are going to have to be eased out of their offices, and professional help may be called upon. I suggest anger-management counselors. They could have a quiet talk with those members of Congress who, as the saying goes, do not get it. Possibly those experts have a gentle way of telling the defeated members that they are history. Maybe some will be led off to "The Daily Show" to join Jon Stewart in acting superior and laughing at his futile efforts at humor. Possibly there is a branch of psychiatry that deals specifically with delusions of victory. Its adepts can coax the defeated members of Congress out of their offices and into the sunlight. Let us face facts: It is going to be very difficult talking to these defeated Democrats. Consider one who is going to be leaving her office very soon. Tuesday night, she said to a room filled with election workers, "We have taken the country in a new direction, and we are not going back to the failed policies of the past." That was House Speaker Nancy Pelosi. She was fully dressed, but there was an air of the manic about her. How is incoming Speaker of the House John A. Boehner going to deal with her when he arrives at her office? He may need a tranquilizer gun. The reason it is difficult to deal with many of the defeated Democrats is that they do not recognize that Republicans even exist, or, for that matter, independents, who broke 55 percent for Republicans. These Democrats think history is with them and that the whole world is going their way, adopting huge stimulus policies, "cap-and-trade" and variations of Obamacare. They do not realize that there is no way to pay for their extravagance. Moreover, the civilized countries of the world, for instance Great Britain and France, are paring back entitlements and cutting budgets because they recognize they cannot pay for them. The delusions are held not only by defeated members of Congress. Other members of what professor Angelo M. Codevilla calls "the ruling class" also share their benightedness. Ross Douthat, in the New York Times Monday, said he thought Social Security, founded in the 1930s, was "achieved amid strong economic growth, rather than at the bottom of a recession." That is a unique perspective on the 1930s. He concluded that "Obama seems as if he would have been a wonderful chief executive in an era of prosperity and consensus, when he could have given soaring speeches every week and made us all feel tingly about America." Has Mr. Douthat heard the things Mr. Obama has actually said about America, its arrogance and its militarism? Then there is the Times' David Brooks, who seems to call the incoming Republican majority in the House a party that has "developed a sense of modesty" and will act as Mr. Brooks tells it to. On Nov. 11, 2008, he wrote that "the Republican Party will probably veer right in years ahead, and suffer more defeats." That is a theme Mr. Brooks reiterates time and again. The party did "veer right" and in 2010 suffered the greatest off-year election victory in two generations. It will now go its own way irrespective of judgments of Mr. Douthat and Mr. Brooks and the rest of the ruling class. One of these popinjays' favorite judgments is that the Republican Party has no very well defined alternative to Mr. Obama's governance. It is the party of anger, and you cannot govern from anger. Yet this, too, is nonsense. The conservatives are not particularly angry, and they do have an alternative to Mr. Obama. The conservatives in the Republican Party and their reinforcements from the Tea Party have a perfectly workable alternative to Mr. Obama's socialism. It is Rep. Paul Ryan's Roadmap for America's Future. It is a plan to grow the economy, cut spending and, in general, revive America. We shall be hearing more about it in the months to com e. http://tinyurl.com/285deay
Insurance regulators unanimously recommended controversial rules Thursday governing how much insurers must spend on patients’ medical care – without adopting any of several last-minute amendments some consumer advocates had feared would gut key provisions.
The rules, which involve an important provision of the new health overhaul law, now go to Health and Human Services Secretary Kathleen Sebelius, who has final say.
Leaders of the National Association of Insurance Commissioners voted after months of meetings and debate involving industry and consumer representatives. The recommended rules center on the "medical loss ratio," which is how much insurers spend on medical care versus administration and profit.
The health overhaul law approved by Congress in March requires insurers to spend at least 80 percent of revenue on direct medical care, starting next year, or issue rebates to consumers if they fail to hit the target.
During the debate leading to the recommendations, insurers pushed for the broadest possible definition of what constitutes medical spending, including such things as the cost of paying claims, signing up doctors to their networks or running customer service call centers. The final recommendations are narrower, which is what consumer groups had urged.
The commissioners would allow, for example, insurers to include many quality improvement costs, along with payments to doctors, nurses, hospitals and other providers in their medical expense calculations but not costs of fraud control efforts or billing. They also recommended insurers be able to deduct federal and state taxes, but not taxes paid on investment income.
Three contentious last-minute amendments failed to pass. One would have allowed insurers to deduct broker commissions, another would have allowed them to average their medical spending nationwide, rather than state-by-state, and the third would have loosened a complex "credibility adjustment" formula to allow many insurers, particularly smaller ones, to hit the medical spending targets, even if they don’t spend 80 percent on medical care.
Today, Sebelius promised to issue regulations in coming weeks, saying, "These recommendations are reasonable, achievable for insurers and will help to ensure insurance premiums are, for the most part, supporting health benefits for consumers."
Insurers disagreed. The rules would "reduce competition, disrupt coverage and threaten patients’ access to health plans’ quality improvement services," America’s Health Insurance Plans (AHIP) President and CEO Karen Ignagni said in a statement. http://tinyurl.com/2vmvpfr
Hospital groups are asking the CMS to revise how it plans to calculate the payment adjustment for certain cancer hospitals under the proposed outpatient payment rule for 2011.
The health reform law called for the CMS to study 11 cancer hospitals across the country to see if their outpatient costs were higher than the costs incurred by other hospitals. Finding this to be the case, the agency proposed extra payments for these hospitals, which are exempt from the inpatient prospective payment rule and whose outpatient payments are already somewhat low. This provision would boost outpatient prospective payment system, or OPPS, outlays to the 11 cancer hospitals by 41.2% next year, but the CMS would have to reduce payment to all other hospitals by 0.7% in order to maintain budget neutrality, the American Hospital Association noted in comments (PDF) to the CMS.
In particular, the proposed cancer hospital adjustment disregards “hold harmless” payments these 11 hospitals already receive permanently to limit their losses under OPPS, the AHA stated, asking the CMS to consider these additional payments in calculating the adjustment.
The Federation of American Hospitals made similar recommendations (PDF) in their comment letter on the OPPS. “The FAH does not believe it is appropriate or equitable to propose such substantial increases for 11 hospitals at the expense of significantly lower payments to all other hospitals,” the organization stated in its letter.
Many of FAH's member hospitals and other hospitals across the country face the same cost challenges as these 11 hospitals, including the high cost of cancer drugs, “and yet they would be harmed by the CMS proposal,” the comment letter stated. http://tinyurl.com/2a5mu7a
|
RSS Feed