Is the current Medicare reimbursement method flawed?  It depends on your perspective, but one thing appears more and more apparent – the recent healthcare reform bill does not appear to be a solution to the problem.

BNET Today

Judging by the opposition of surgical societies and some state medical societies to the Senate healthcare-reform bill passed last December, many physicians — particularly highly paid specialists — are relieved now that it appears the legislation is on its deathbed. But they shouldn’t be too gleeful, because in the absence of reform, fewer and fewer patients will be able to afford their services.

Just ask Clyde Yancy, a cardiologist who heads the American Heart Association (AHA). Yancy cited a recent AHA survey of heart patients in explaining why he believes that reform of the system is still necessary. In the survey of 1100 adults who said they had heart disease, a stroke, or high blood pressure, 56 percent of the respondents — most of whom had insurance — said they’d had trouble paying for prescription drugs or medical care in the past few years.

In an op-ed piece about the survey in a trade publication, Yancy referred to the “collective sigh” of relief among physicians about the stalling of reform and suggested that it’s premature. “The need for the discussion has not gone away,” he said. “If anything, that need is highlighted by this survey.”

Of course, Yancy is walking a fine political line. He chose not to highlight the financial pain doctors will feel as insurance coverage shrinks, and instead focused on the problem of patients not receiving proper care because they can’t afford it. But his intended audience of heart doctors can certainly read between the lines, particularly since they’re already battling to preserve their incomes in light ofsome recent Medicare changes.

Last fall, Medicare announced changes in its reimbursement methodology that basically lowered payments to specialists while raising them for primary-care physicians. Cardiologists, among the hardest hit specialists, were slated to lose an average of eight percent in 2010 and more in the ensuing three years. The new fee schedule also slashed payments for nuclear scans by 40 percent and cut the fees for echocardiograms and other tests by about a third. In late December, the American College of Cardiology (ACC) sued HHS Secretary Kathleen Sebelius to reverse the cuts scheduled to take effect Jan. 1. Two weeks later, a federal court in Miami dismissed the suit on jurisdictional grounds, but the ACC pledged to carry on the legal fight.

The cardiologists, of course, claim that the drop in Medicare payments for high-end imaging tests will drive some of them out of business and that they’ll have to cut back on the services for the poor. In actuality, though, heart doctors have steadily ramped up their use of tests and other services to maintain their incomes. A study released last fall by cardiology services provider MedAxiom found that visits to cardiologists had risen 12 percent in 2009 and that return visits had climbed 34 percent since 2000. Meanwhile, the number of echos that cardiologists performed jumped 15 percent in 2009 and 43 percent in the previous five years.

These numbers highlight the main issue: the more Medicare cuts back on reimbursement, the more tests, procedures and follow-up visits physicians do. And the more doctors do, the more Medicare cuts its fees. The only solution is to dump the fee-for-service payment system — a goal that some of the provisions in the healthcare reform legislation would move us toward. Having to live within a budget would upset cardiologists even more than the recent Medicare cuts. But it’s hard to see how their patients will be able to afford their services in the long run under any other reform plan.

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Costs continue to rise even with the passage of landmark healthcare reform. Read the following article for an interesting take on outcomes of the new reform.

John Greyman

The passage of the Patient Protection and Affordable Act of 2010 (PPACA), our new health care legislation, in March was hailed by its supporters as an historic event of the magnitude of Social Security and Medicare. But four months later, it remains controversial, with repeated polls showing three large groups of divisive opinion, including those who would work to repeal it and others who believe that it will make no difference. The Democrats have launched a $125 million PR campaign to defend the new law amidst growing signs that many Democrats facing re-election are failing to get political traction on the issue. (1)

We are being advised by many to “wait and see” how this complex new bill plays out over the next five to ten years, but we can already know what its outcomes will be. More than 30 years of health policy science, including documentation of the repeated failures of incremental changes built into the new law, together with well-entrenched trends in our market-based system, allow us to project its outcomes with confidence. For this legislation has been molded and crafted by the political power and money of corporate stakeholders in the medical-industrial complex.

Five previous posts in 2009 described the uneasy “alliance” of the five biggest players — the insurance industry, the drug industry, the hospital industry, business and organized medicine. They will do just fine with the new law at the expense of patients, families and Main Street.

Health care “reform” this time around was intended to address these four basic system problems: (1) containing health care costs, (2) making health care more affordable, (3) increasing access to care, and (4) improving the quality of care. This post introduces a series of five that will examine how well the PPACA will do on each of these four goals, followed by an overall assessment of the law. These posts will draw in part from my new book Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform, soon to be released by Common Courage Press in both print and eBook format.

Continued Unrestrained Drivers of Health Care Costs

These are some of the many reasons that we can already conclude that health care costs will continue to run out of control at rates far exceeding the costs of living and median household incomes.

• No price controls. Wall Street has already factored in rapid expansion of markets for drugs, medical devices and other services in a system of expanded access. There is also a long line forming of providers of information technology and administrative services that will exploit the complex implementation of this law.

• No bulk purchasing. The PPACA has prohibited the government from negotiating the prices of prescription drugs and retains a ban on importation of drugs from Canada and other countries.

• Lack of control over perverse incentives that drive increased volume of services. These in turn are driven by retention of fee-for-service (FFS) reimbursement that encourages physicians and other providers to offer more services than are medically appropriate or necessary.

• No effective mechanism to rein in marginal or ineffective technologies. Coverage policies for new drugs and medical devices are still lax and not subject to rigorous evidence-based criteria for either efficacy or cost-effectiveness.

Although the PPACA does call for a Patient-Centered Outcomes Research Institute, its role is already neutered by not having the power to mandate or even endorse coverage or reimbursement rules for any particular treatment. (2)

• The dominant business model of health care prevails, with many facilities and services remaining for-profit and investor-owned and with an ongoing trend for increasing consolidation within industries.

• The PPACA has grandfathered-in specialty hospitals, typically physician-owned facilities that focus on well-reimbursed procedures in such areas as cardiology and orthopedics, whereby physicians can “triple dip,” earning high incomes as providers, owners and investors.

• More preventive services will further fuel health care inflation. While the PPACA does provide new coverage for many preventive services, this will lead to increased costs due to additional diagnostic and treatment services engendered. (3)

• Private insurers can’t contain health care costs, even where they have dominant market power. A 2009 report by the Congressional Research Service, “The Market Structure of the Health Insurance Industry,” concludes that:

The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output — high premiums and limited access to health insurance — combined with high profits. (4)

• There are no controls over premium rate increases by insurers. Despite the outcry by government officials, annual premium rates are escalating at rates up to 56 percent (5), and there is no end in sight for continued exorbitant rate increases. Insurers will continue to game the system by extracting maximal profits and offering reduced coverage with actuarial values (the amounts insurers actually pay in coverage) as low as 60 or 70 percent.

• National health care spending will grow unabated despite the passage of
PPACA. The Centers for Medicare and Medicaid Services (CMS) projects that overall national health expenditures (NHE) will increase from its present 17 percent of GDP to 21 percent in 2019, a total of $4.470 billion. (6)

These well-documented trends leave no room to think that health care “reform” will have any chance to contain health care costs. Instead, health care inflation will be exacerbated by all the new incentives and inefficiencies in the new “system.” In our next post we will examine the impact of these trends on affordability of health care.

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