American College of Physicians: Internal Medicine — Doctors for Adults ®


ACP's take on Medicare and other health ccare reforms

How the College hopes to achieve goals like universal coverage, coordinated care and liability reform

From the March 1997 ACP Observer, copyright 1997 by the American College of Physicians.

By Howard B. Shapiro, PhD

Medicare reform is high on the ACP public policy agenda at the beginning of the 105th Congress. With a new position paper in hand promoting changes in the way Medicare does business, ACP President Christine K. Cassel, FACP, and staff from the College's Division of Public Policy have been meeting with key members of Congress to explain the College's recommendations.

Congress is expected to enact program changes to reduce projected spending by about $100 billion from 1998 through 2002—a cut equalling roughly 6.5% of the $1.5 trillion budgeted for that period. Most of the pressure will be on cutting spending for hospital services, including graduate medical education (GME), nursing home services and home health services in order to extend the solvency of the hospital (Part A) trust fund. However, the president has also proposed reductions in Part B spending, including $7 billion in payments to physicians.

Recognizing that savings are needed to keep Medicare solvent, ACP is faced with a dual challenge. The first is to make sure that all health care providers share in short-term reductions without affecting patient access to medical care. The second is to promote long-term changes that promise to slow Medicare's growth, particularly as the over-85 population grows and the first baby boomers begin retiring in about 15 years.

Medicare is one of five areas that represent the College's top advocacy priorities, which are listed below:

Coordinated Medicare service

ACP's recommendations for improving the coordination of Medicare services are based on models that show that doing so produces both high quality and cost-efficient care. In both managed care and fee-for-service settings, the College backs case management, competitive bidding, selective contracting, palliative care and other mechanisms to allow physicians to manage the services provided to Medicare beneficiaries.

The College has contracted with the research firm Lewin and Associates to estimate how much could be saved from implementing these approaches. Those estimates will be shared with policy-makers as deliberations continue. Medicare reforms will be part of the "reconciliation" or deficit reduction bill—a legislative package of tax and spending changes—that Congress is expected to consider this summer and the president is expected to sign this fall.

Universal coverage

The College remains committed to universal coverage, achieved incrementally using both public and private-sector mechanisms. Passage of guaranteed issue, portability and other insurance reforms in the Kassebaum-Kennedy bill last year was an important first step. As a next goal, ACP is supporting efforts to extend coverage to children, who constitute about 10 million of the 42 million uninsured.

While the Kassebaum-Kennedy bill is expected to increase the availability of health coverage, it did not address questions of affordability. President Clinton has proposed a limited approach that would help temporarily unemployed workers continue their employer coverage under existing COBRA provisions for up to six months by subsidizing their health premiums.

Using a modified community rating instead of rating enrollees by risk or group experience is another model that has been tried in a number of states. Purchasing pools also can provide a mechanism for aggregating individuals and small groups to achieve lower premiums. The College will continue to seek legislative opportunities to increase health coverage through these and other means.

ACP opposes steps that would increase the number of uninsured through erosion in Medicaid. The College has opposed moving from an entitlement system to a system of block grants because eligible individuals would lose the guarantee of coverage and the program would have a limited ability to respond to an economic recession. In addition, the College insists on federal quality standards as states use managed care for their Medicaid beneficiaries and, in some states, for a portion of the uninsured.

Practice environment

The College is pushing for two improvements in the Medicare fee schedule. The first is adopting a single conversion factor for the annual update, a step that will increase payments for non-surgical procedures and evaluation and management (E/M) services. The second is implementing a methodologically sound process for calculating the practice expense (overhead) component of the Medicare fee schedule on the basis of resources actually used. This step is necessary to correct current underpayments for office-based services.

Liability reform is also part of this agenda. Traditional tort reform based on California's "MICRA" law remains a goal, at least to stabilize the current situation, and a cap on noneconomic damages would bring some predictability to liability determination. But in a managed care world, additional reforms are necessary that take into account the increased complexity of medical decision-making, where factors beyond the control of doctor and patient may affect the likelihood of injury. Legislation is necessary to reverse court interpretations of the Employee Retirement Income Security Act (ERISA) that have protected health plans from liability. And the College has called for demonstrations of organizational or "enterprise" liability that would hold an organization such as an HMO liable for injury and thus encourage system-wide quality improvement efforts.

The College is seeking additional authority for physicians to form and direct integrated health care plans. Legislative authority for provider-sponsored networks to contract directly with Medicare--and compete with insurancecompany-dominated plans--remains an important goal.

Restructuring the workforce

There is only limited consensus within the medical profession on appropriate solutions to issues of GME financing and workforce supply.

Most people agree that the United States faces an oversupply of physicians. Legislative solutions may create a cap on funding of current residency slots and gradually reduce reimbursement for indirect medical education expenses. However, the political clout of academic institutions is likely to prevent any dramatic reductions.

ACP and other physician organizations have supported all-payer funding for GME, but capturing a percentage of private insurance premiums to pay for education is seen as a tax and not likely to win passage. More likely is new authority for Medicare to pay for training in non-hospital settings. House Ways and Means Committee Chairman Bill Archer (R-Texas) told ACP that he wants to dissociate GME funding from service payments and fund GME through direct appropriations. Despite his powerful support, such a proposal remains controversial.

Public health initiatives

A number of public health issues round out the policy agenda. In a policy paper to be released at Annual Session, the College will call for new public and private partnerships to address the severe problems of inner city health care. The College has been a strong supporter of FDA regulations to decrease cigarette smoking by youth and continues to oppose Congressional efforts to restrict the FDA's authority. ACP supports federal government research funding through the NIH and has used recent meetings to impress upon members of Congress the need for increased funding for research on quality measures and outcomes and other areas of health services research.

Howard Shapiro is Vice President for Public Policy and heads ACP's Washington, D.C., Office.

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