The ACP Advocate Blog

by Bob Doherty

Thursday, October 22, 2009

Coming soon! Medicare Part E!

The Hill reports that the House Democratic leadership has decided to rebrand the "public option" as Medicare Part E, that is, Medicare for everyone. But are they really proposing that everyone should be able to enroll in Medicare, fulfilling the wildest hopes of single payer advocates?

Not likely. The House's version of Medicare Part E could more aptly be labeled as the Medicare Part UPWDNHATAEHCAWDNQFMOS program , standing for Uninsured Persons Who Do Not Have Access To Affordable Employer Based Health Coverage And Who Do Not Qualify For Medicaid Or SCHIP. Barring a complete re-write of the House bill, the re-branded public plan option would be available only to the 30 million or so people who fall in the UPWDNHATAEHCAWDNQFMOS category and are eligible to receive federal subsidies to buy coverage through a health alliance. Calling it Medicare for Everyone doesn't make it so.

Still, it might be a very good political move. People like Medicare and don't associate it with "government run" health care (remember the reports of seniors at the August town hall meetings screaming "keep government out of my Medicare?").

The Hill also reports that the plan will be "the 'robust' option or 'Medicare Plus 5' in the jargon that has emerged on Capitol Hill, [which] ties provider reimbursement rates to Medicare, adding 5 percent."

The American College of Physicians has said that it could be appropriate for people eligible for the health exchanges to have the option of choosing either a qualified private insurance plan or a public health plan, provided that the public option is funded through premiums and is not tied to Medicare physician participation agreements or Medicare rates. ACP wrote:

"Proposals to use the current Medicare reimbursement structure as a basis for reimbursement under the public plan option raise significant concerns. In particular, payment levels for physicians participating in the public plan would amount to price controls that insufficiently compensate physicians for their work. It is widely believed that the current Medicare fee schedule is ineffective in promoting quality care and incentivizes volume-based rather than value based health care. In its March 2009 report to Congress, MedPAC stated that it was dissatisfied with the current fee schedule updating mechanism for physician payments. Further, the Medicare fee schedule has resulted in improper utilization of services rather than cost containment. Proponents of the public plan option have cautioned that hospital closures, stifled innovation of new technology, and limited access to physician services could result if a government-run health plan strictly limits payments to providers under a public plan ... To be successful, a public health plan would not have to control prices to maintain access, promote quality care, and limit cost efficiencies ... Instead, the government (or the plan's administrator) should negotiate with providers in a manner similar to the private market."

Especially given the Senate's failure yesterday to repeal the Medicare Sustainable Growth Rate (SGR) formula, it doesn't make sense to build the new Medicare E program on a payment structure that Congress itself knows doesn't work and would require that they close a $240 billion budget shortfall to stop the scheduled physician pay cuts. The same payment structure that Congress acknowledges undervalues primary care and rewards volume over value. Yet Speaker Pelosi wants the flawed Medicare fee schedule to be the foundation for the new public option?

My guess is that the decision to base the public plan on the Medicare rates is principally a negotiating tactic in anticipation of a conference committee with the Senate, which is not likely to include a "robust" public option in its bill. A compromise might be to accept the House's proposal for public plan option, but to divorce it from the Medicare rates and instead allow the public plan to negotiate rates with physicians, hospitals and other providers. Yet in one form or another, it seems more likely than ever that some kind of public option will end up in the final bill. Call it Medicare E if you want, even though most of us will not have access to it.

Today's questions: What do you think about re-branding the public option as Medicare Part E? Should it pay physicians and hospitals based on the Medicare rates (plus 5%) or should the rates be negotiated?

9 Comments :

Blogger PCP said...

That all depends on your bargaining power. If you are a solo PCP with all sorts of competition and very little leverage against an oligopolistic insurance company with 90 percent market share the answer is one thing, medicare plus 5 is about all you can realistically hope for. If on the other hand you are the only hospital in a 50 mile radius, then surely you want to negotiate.
Physician led primary care as it is currently structured is on a sure path to extinction, gov't policies are clearly biased against it, and the current thrust toward accountable care organisations etc, will ensure the end. This will not encourage medical students to actively pursue it. We might end up with a few dis-spirited souls going through the motions having been unable to sub-specialize, but you will lose those that actively chose that as a career path.
The resulting system will be something less than satisfactory, but will be projected as the new more efficient model ala the Community health center model, laughable but stated as fact nonetheless. The trajectory is clear, and unless we as a profession stand united, including proceduralists, nothing will change. What Proceduralists fail to see is that Primary care is the canary in the coal mine. If we are cleared out, they will be next.
In my opinion, for physician unity to have a chance, we need to reconstitute the RUC with adequate represention from Generalists/Cognitive specialists or failing that scrap it. We then need to stand firm for what we know is right for our patients and for us. As it stands we are very soft targets despite our unparalleled collective grass roots network and leverage.
I am not certain about this but I would hazard a guess that under current circumstances Generalists/Cognitive specialists in the majority want a Public option and Specialists/Hospitals do not. Everyone knows why. The market place as it is structured really ties the hands of PCPs and then beats them senseless.
I know of many Doctors who have said if it were not for the ancillary costs and their need to stay in network to have ordered tests/scans/referrals etc covered, that they would go cash only (for their services) and their patients probably wouldn't mind either, given the freedom it offers both parties. Patients already pay a significant portion of the fee schedule in copays.

October 22, 2009 at 4:55 PM  
Blogger DrJHO7 said...

What do you think about re-branding the public option as Medicare Part E? Should it pay physicians and hospitals based on the Medicare rates (plus 5%) or should the rates be negotiated?

Maybe they should call it Part P.
Who cares what they call it.
If there is to be a "public" plan, to deny access to it for individuals who have an employer-based plan is wrong. Who decides if the employer-based plan premium is "affordable"? If I run a small business and I can buy blue cross for myself and another employee for $24,000/year for a high deductible plan, but the "public plan" is available for $18,000/year, I want to opt in for the public plan, provided I've looked at the available benefits and provider networks under that plan and have found them to be comparable.

Like it or not, most physicians are willing to work for MCR rates, and in some markets, MCR is the best, if not one of the best payers. The MCR fee schedule is a public document (albeit not so easily accessed), and most of the private payers base their reimbursement schedules on some percentage of MCR, +/- a couple percent here and there. Why shouldn't the P plan base its fee schedule on some percentage of the MCR schedule? It is the de facto benchmark. It's certainly a place to start. If left to physician organizations or an RUC to construct a new schedule, warm and fuzzy agreement on something like this is highly unlikely.

Is 105% of MCR enough? Well, it's 5% better than what I'm getting now for most of my work. Certainly I'd like to see 120% or 150% or 200% of MCR, and perhaps the percentage would be negotiable, but negotiable based on what? Whether I operate a PCMH, or do primary care, or even participate in the plan's network?

What burns me, though, is having to pay the premium that I pay for health care insurance, knowing that the 20% or so that's being lopped off the top of each of those dollars is lining the pockets of CEO's and share-holders of the private insurer (and maybe the campaign funds of the senators who just voted Nay for the repeal of the SGR formula).

October 22, 2009 at 7:33 PM  
Blogger David said...

Whatever the final legislation, the public plan option with Medicare Part E/P or whatever, will have the legacy problems of Medicare (potentially including the SGR) and is a volume driven system of payment. The power to negotiate rates--if given--will be pulled away within a few years because a system based on traditional FFS medicine and the current RVU value structure will drive procedural volume ("because that's where the money is"--Willie Sutton)and Congress will eventually respond to unsustainable costs with a global fee reduction (global based on "fairness"). Additionally, the pressure to make the public plan available to all will be intense at some point ("to save American business"). Unless the system of payment is radiacally changed (via ACOs, bundled payments, PCMH subsidies, etc) the incentives will encourage overuse and we'll not end up with "Medicare for all", but "Medicaid for all" paid by the federal govt.

October 23, 2009 at 1:30 PM  
Blogger Arvind said...

I agree with all three commentators. The major idea that continues to be ignored, is that nobody can expect cost of service to go down when a unit value is pre-fixed. In other words, a price-fixed third party reimbursement system (whatever you may call it) is bound to fail - either because it will encourage higher volume or produce poor quality. Even a plumber could tell you that - you get what you paid for.

If ever our representative organizations listen to practicing physicians, they will use their leverage to highlight the following points:
1) create a level playing field where every physician is able to negotiate fair compensation based on supply and demand (retail service markets work well this way). Let there be basic criteria that each practice can demonstrate, that place them at a higher or lower level. My liability carrier gave me 50 point questionnaire to confirm that I was utilizing my EMR to the benefit of my patients and to reduce errors/risks; and gave me a 2.5% reduction in premium for 3 years. I doubt Medicare would even consider doing something like that - all they come up with is a monster like PQRI, which only favors large organizations that have lots number-crunchers on their payroll.
2)allow people to choose how they want to contract with their physicians and pay for their services, with full transparency of cost. If they pay a directly negotiated at the time of service and get reimbursed (from private or public payer), they can decide whether a particular service was worthwhile. They can look for alternatives if they are not happy. But they have control over their decisions.
3) eliminate this nonsence of CPT codes and RVUs and the like for office-based services. Perhaps they can be used for actual procedures. An office visit is not a "procedure", so why do we have to use a "procedure code" for it? Since we have effectively reduced a service to a commodity by attaching it to a code, we have no leverage and no method to accurately reward quality. Let's return the true meaning to the word "negotiation" rather than throwing it around casually.

October 23, 2009 at 5:06 PM  
Blogger Marc said...

Allow balance billing...if we remove the medicare charge restrictions then government costs can remain low and government can balance its budget without any problems. Otherwise, physicians who opt out of medicare can free themselves from politics and government tyranny.

October 23, 2009 at 5:14 PM  
Blogger Marc said...

Mr Doherty: You have blocked my comments before about alternative approaches to medicare. Why the censorship? Are you afraid to allow alternative approaches on your page? It is clearly public policy as described in great detail by MedPAC that physician payment adequacy is assessed by beneficiary access to physicians. The obvious way to increase reimbursement is to decrease physician access to Medicare beneficiaries by opting out or providing only concierge care. Why do you not allow discussion of these theoretical possibilities? I sure hope ACP is in favor of free speech!!!!!

October 23, 2009 at 5:17 PM  
Blogger Rich Neubauer MD said...

I am conflicted.

I firmly support both delivery system reform in general and specifically a well designed public option. My hope has been that this would drive health care in right directions, including transformation of primary care from a dying pursuit for physicians caring for adults, to its rightful place in the forefront of the system.

This morning, somewhere in the suburbs of DC as I drove by a Primary Care Clinic, a prominently displayed sign reminded me of something I didn't need reminding of (that is the rule where I come from in Alaska): "Now accepting New Patients. No Medicare."

I'm coming to understand that we probably need to take "first steps" in the current reform effort in order to set the stage for "next steps" that may come later. I also understand that ACP will not get everything we want. However, we do need to at least have hope that substantive steps are being taken to bolster primary care, and also that a sensible path lies ahead.

Right now, the array of options that Congress continues to roll out are each flawed, some more seriously than others. While this process is transparent, it is also getting dizzying. Perhaps there is logic here: by the end of the great health care debate of 2009 the average American will be so tired of the whole kit and kaboodle that Medicare Part UPWDNHATAEHCAWDNQFMOS will actually make sense.....

October 23, 2009 at 6:25 PM  
Blogger David said...

Its not just the "nuts" on the blogosphere concerned about the public plan. Fred Hiatt is the editorial page editor of the Washington Post. His Op Ed on the public plan expresses my concerns well.
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/25/AR2009102502043.html?hpid=opinionsbox1

Robert Samuelson's Op Ed today expresses similar concerns.
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/25/AR2009102502041.html?hpid=opinionsbox1

October 26, 2009 at 6:18 PM  
Blogger Jay Larson MD said...

A rose by any other name still has thorns and a public option is a thorny issue.

October 28, 2009 at 4:40 PM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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