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


New budget brings mixed news to internists, health care

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

By Deborah Gesensway

The new federal budget signed into law last month contains a mixed bag of news for internists and health care.

On the positive side are expansions of coverage and benefits, some projected increases in Medicare reimbursement for physicians who provide evaluation and management services and some new programs that might improve the quality of care provided to Medicare beneficiaries. (See article on case management, ACP amendment spurs case management study.)

The College was somewhat disappointed, however, that Congress remains unable to tackle substantive reform of the Medicare program; instead, the Balanced Budget Act of 1997 creates a 17-member national Bipartisan Commission on the Future of Medicare that will report by March 1, 1999. Legislators also rejected some of ACP's proposals, such as waiving some solvency standards for provider-sponsored organizations (PSOs).

In general, however, "there are a lot of positive things in this budget for internists," said John Tooker, FACP, the College's Deputy Executive Vice President. Particularly important, he said, was the final compromise on Medicare reimbursement. Although that compromise was not all the College wanted, it starts a process that should benefit internists, he said.

ACP fought hard to convince Congress to stick with its original directive to HCFA to rework the RBRVS by January 1998. Doing so, the College argued, would allow the practice expense component of the Medicare fee schedule to be based on actual resources used rather than on historical trends, which do not fully compensate office-based physicians. The new budget instead directs HCFA to delay implementation until 1999 and then phases the change in over three years.

On the plus side, however, the budget agreement mandates a 10% "down payment" on resource-based practice expenses in 1998. According to the American Society of Internal Medicine, this provision will redistribute nearly $400 million from surgical procedures done in the hospital to office visits.

Other positive aspects of the budget include the move to a single conversion factor (see The new federal budget: what it means for internists) and the $24 billion that will be allocated over five years for children's health insurance, with a first installment of $5 billion due in October. The money will be targeted to children in low-income working families ineligible for Medicaid. It will be financed largely by a 15-cent per-pack tax increase on cigarettes.

In the final compromise, the states were given some flexibility in deciding how to spend their childrens' health money, but most of the funds must go toward providing a set package of benefits. The states otherwise can seek a federal waiver to design a different package.

The College was pleased with the outcome, even though it does not go as far as ACP would have liked, saying it represents an important incremental step toward universal access to health insurance. The College was disappointed, however, that the budget agreement also reduces total Medicaid spending by about $14.6 billion over five years.

This budget also gives preventive care a boost. Medicare will now pay for annual mammograms, Pap smears and pelvic exams for women in the program; bone density measurement for women at high risk of developing osteoporosis; prostate cancer screening for all male beneficiaries over age 55; and colorectal cancer screening for all beneficiaries over age 55. There is also money to cover a set of new diabetes self-management benefits and $8 million a year for an outreach campaign to motivate seniors to get their annual flu vaccines.

The 1998 federal budget also contains the following provisions:

  • An expansion of the medical savings accounts (MSAs) demonstration project to allow for 390,000 Medicare MSAs, each with a $6,000 deductible.
  • A new provision, advocated by the AMA, that permits physicians and Medicare patients to contract with one another outside of Medicare. Medicare balance billing limits would not apply to these private contracts, according to the AMA.
  • Removal of graduate medical education and indirect GME funds from the capitated payment made to Medicare managed care organizations. This will transfer about $6 billion directly to teaching hospitals. Disproportionate share moneys were not carved out the Medicare HMO payment.

For more information about the health care provisions of H.R. 2015, the Balanced Budget Act of 1997, the AMA has summary information plus a link to the Speaker of the House's page:

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