Monday, March 29, 2010

How health reform will help Medicare patients

You may have noticed - uncharacteristically for me - that I haven't posted a blog in week. I thought it would be better to allow the readers of this blog to post your own reflections, and you did - with comments ranging for unabashed pride to skepticism to disdain for the law and ACP's role in bringing in about.

I respect the principled arguments made by those who believe that the legislation gives the government too much control, or who fear that it will add to the deficit and public debt, even though the CBO says otherwise. But there is one claim made by some of the critics that sticks in my craw, which is that the legislation will result in "massive cuts" to Medicare.

Here are the facts. Seniors in the traditional Medicare program will get better benefits because of the new law. The Medicare Part D "doughnut hole" will be phased out, starting with a $250 rebate check this year. Later, Medicare will begin covering preventive services, like check-ups and screening tests, with no co-payments or deductibles. The law actually prohibits cuts in Medicare's mandated benefits. Some seniors in Medicare Advantage plans might see a loss of optional benefits, like eye glass coverage, if their health plan decides to trim benefits to offset lower Medicare payments. But the fact is that the overwhelming majority of seniors in the United States will have lower out-of-pocket costs and better coverage.

What about the $500 billion "cuts" in Medicare? Well, for one thing, they aren't cuts, but reductions in the rate of increase paid to some non-physician providers over the next ten years. Hospitals will get smaller annual "market basket" inflation increases. They also will see gradual reductions in their disproportionate share payments, which cover the costs of indigent care, because they will have fewer indigent patients to treat and less uncompensated care. (These cuts were agreed to by the major trade associations representing hospitals.) And the law corrects that long-standing over-payments of Medicare Advantage plans, which up until now were able to charge the federal government more for taking care of seniors than a physician or hospital in traditional Medicare.

And, guess what, the $500 billion in Medicare savings actually extends the life of the Medicare Hospital Insurance Trust Fund. By spending less over the next decade, the Trust Fund won't run out of money in 2017, as previously forecasted by Medicare's actuary. Instead, it is now expected to remain solvent until 2026.

Many physicians will see higher payments under the legislation. General internists and primary care physicians will get a 10% Medicare pay increase for their office and other outpatient visits, beginning in 2011, as long as such visits constitute 60% of their total Medicare allowed charges. And in years 2013 and 2014, Medicaid payments for visits and vaccines by primary care physicians will be increased to no lower than the Medicare rates. ACP fought long and hard to get both provisions included in the final law.

There are a few provisions that could result in reductions in payments to some physicians in future years: payment penalties for not participating in Medicare's Physician Quality Reporting Initiative; a "value index" that beginning in 2014, might lower payments to physicians with higher costs and poorer outcomes; and the possibility that an Independent Payment Advisory Board could recommend additional reductions. ACP has expressed concern about each of these provisions, and we will seek to change them in future legislation. But the fact remains that the legislation will spend billions of dollars more to increase payments for primary care, while physicians were mostly exempted from more cuts.

Yes, physicians are still facing potential cuts from the Medicare's SGR formula. But these cuts were the result of a formula enacted by Congress back in 1997, and that successive Congress - no matter which political party was in control - have failed to correct. President Obama, at least, has proposed to repeal the SGR and to accurately account for the costs of repeal in his budget. Yes, the Senate still needs to act to permanently repeal the SGR, as the House has already voted to do. But the idea that the SGR cuts are the result of the health care reform legislation is silly, when doctors would have been facing the cuts even if health reform had never seen the light of day.

The bottom-line is that health reform law is a good deal for Medicare seniors, because it will lower their out-of-pocket costs, expand coverage for preventive services, close the doughnut hole, extend the life of Medicare Part A, and even pay their primary care physicians a bit more.

Today's question: How do you think the new health reform law will help or hurt Medicare patients?


Brad F said...

In terms of Medicare savings, I posted this commennt--author of op-ed responded.

The issue of "double counting" is getting tossed about, and I dont know what to make of it. My read, is while CBO scoring delivers favorable numbers, their accounting methods and how they see Medicare and Federal buckets influences the outcome. It is what it is.

I would like to get your take.

Harrison said...

I think the concern voiced by the GOP is that Medicare's trust fund is already bankrupt. And I think they would argue that the SS trust fund is also. The line of thought I believe is that these are not really funds. There is no separate capital budget in the federal budget. It is all part of the same thing. There do not really exist any 'set aside's. And so there is either an annual deficit that worsens the public debt, or there is a surplus that lowers the public debt.
There is never a surplus.
The debt only grows, it doesn't get smaller.

Medicare and Soc Security trust funds have only 'IOU's. Not really money socked away.

But what they really have is Treasury bills. And the U.S. has never defaulted on these, and the U.S has no risk of doing so any time soon.
That's why China and lots of other countries and groups and individuals keep buying them.
Cuz they are a good and safe investment.

But that argument is lost.
Political points were made by simply saying that we are passing on a debt to our children and their children and on and on.
It doesn't have to be true.

I think that the health care reform bill helps our patients.
I think you have outlined the ways it helps very well.

Resolution of the SGR will be good.
It probably will cost the Medicare Trust fund and the federal budget $20 Billion or $30 Billion per year to fix it.
But that was never a well thought out accounting trick either and it has caused stress for physicians and it has caused many physicians to stop accepting new Medicare patients -- because of the unknown financial burden it may carry.
Fixing it will help with access for our patients.



Unknown said...


I trust your analysis. Sounds like a good deal for most seniors and I'm pleased by the payment changes for primary care.

The law passed, thankfully, and we need to get engaged in the process of writing of the regulations. I expect intense lobbying and ACP can't let up in promoting our principles and values.

The independent commission is a good idea, if it can truly facilitate the changes needed to reduce unnecessary testing and drive value.

Steve Lucas said...

As a business person, not a doctor, I have a different view of the issue. My understanding is that by the CBO’s own admission the $500B in savings is being double counted. Taken away and then used twice for other programs.

Adding to this we saw last weekend the start of companies doing the financial analysis of tax treatments under the new bill, with one number bandied about of $14B in write offs coming down the line. Companies are setting the frame work for adding more of their retirees to the Medicare roles.

Prior to the signing of the bill we saw immigration reform protest. If this were passed we would see an additional 7M, on top of the 16M, new Medicare patients added to government roles.

Countering this is a slew of new taxes. Alan Reynolds in March 30 WSJ article The Rich Can’t Pay for ObamaCare has a very good article explaining the elasticity of tax payments and receipts. Basically as tax rates go up, receipts go down.

Money is fungible, it does not know where it comes from, nor does it know what it is used for. This year Social Security will, due to the economic downturn, pay out more than it takes in.

The changes to Medicare will be beneficial to doctors and patients. My concern is that in going forward there will not be the funds to continue this level of service. Larger numbers of Medicare and Medicaid patients, combined with falling tax receipts will lead to the inevitable program cutting.

People are talking about a European style VAT, or national sales tax. They are different in a number of ways. While this will generate, one number I heard was $1T for every 1% over ten years, these taxes impact proportionally more the very people we are trying to help.

Additionally the US has some of the highest corporate tax rates in the world, and with many companies now being multi-nationals, it may become easier to shift corporate headquarters into a more tax advantageous country, an additional loss of revenue.

People love to live in France, but everyone does business in the UK.

Steve Lucas

Arvind said...

Medicare's solvency might have been improved by this law, but I strongly believe that Medicare members will suffer because of decreasing access to specialist care. I suppose those PCP's that are rejoicing at the prospect of 10% raise from Medicare will soon find out how difficult and onerous it will be caring for the elderly with multiple complex conditions without the help of specialist input/management. It will not be worth the raise, I can assure all of you.

Besides, when Medicare robbed us (specialists) of 22% and gave generalists 10% raise, I wonder what happened to the other 12% - fuzzy math indeed. Any way I am already half way out of Medicare; and will soon become non-par. So then the seniors in our county will have access to the other 6 Endocrinologists remaining, assuming the others are not smart enough to free themselves from govt servitude.

Rich Neubauer MD said...

In your blog, you outline the specifics in the bill that should be advantageous to those with Medicare coverage.

Moving ahead with reform should help in a general sense as well. Having nearly everyone else covered should help to stabilize medical infrastructure -- both facilities such as hospitals and also hopefully the system by which we deliver primary care (more is needed than is present in the bill, but the bill is a beginning).

Those covered by Medicare will do best if the system overall is functioning well.

Steve Lucas said...

I made an error in my above post. The 16M and 7M are additions to the Medicaid roles not Medicare.

Steve Lucas

Jay Larson MD said...

Yes, the health reform law is a good deal for Medicare seniors, because it will lower their out-of-pocket costs, expand coverage for preventive services, close the doughnut hole, extend the life of Medicare Part A.

What will fail seniors will not be the new health reform law, but the health care system itself. Our health care system is very dysfunctional. As Arvind points out, Medicare patient access to cognitive specialists (including general internists) will continue to dwindle. Perhaps the health reform law should have extended the life of Medicare Part B so that Medicare part A does not have to be used.

As a general internist, I am considered a PCP. This title under-represents what general internists do, especially in smaller communities where there are limited number of subspecialists. We manage the complex patients. We take care of the elderly with multiple health problems. We manage diabetes, heart disease, COPD, osteoarthritis, osteoporosis, and dementia, often in the same patient.

What is going to happen when Medicare patients have coverage but no access to the type of physicians they need?