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


Policy briefs

From the May ACP-ASIM Observer, copyright 2002 by the American College of Physicians-American Society of Internal Medicine.

  • In two papers, College outlines plans to reform Medicare
  • ACP-ASIM recommends Medicare regulatory changes and revisions to pay formula

In two papers, College outlines plans to reform Medicare

ACP-ASIM recently published two papers that outline its key recommendations to reform Medicare. Both papers say reform is needed to keep the federal health care program from becoming underfunded, which would hurt beneficiaries by reducing access and limiting provider choice.

The first paper, which was released in March, details the following four threats to Medicare's future viability and suggests strategies to deal with each:

  • Declining reimbursements. With physicians already facing a 5.4% pay cut this year, analysts estimate that Medicare fee cuts to physicians by 2005 could total more than 18% before inflation. Falling reimbursements may force physicians to limit the number of Medicare patients they treat, drastically reducing access. To counteract that trend, the College's paper makes several recommendations, including halting the current pay cut and developing a different formula to set physician fee schedules.

  • Excessive regulation. ACP-ASIM says that Medicare's management relies on excessive regulation and paperwork, stifling service innovations that could lower costs and improve quality. The position paper calls on legislators to pass regulatory relief legislation, and it urges Medicare to adopt competitive bidding and purchasing procedures to help keep program costs down.

  • Outdated benefits. The current Medicare benefit package, which hasn't been substantially revised since the program was launched in 1965, doesn't cover prescription drugs or many preventive and screening services. The College calls for changes that include a prescription drug benefit and coverage of physician-directed geriatric assessments.

  • Inadequate financing. The program's current financing cannot ensure Medicare's long-term solvency. While the College does not advocate the adoption of a defined contribution financing model, it would support requiring higher-income beneficiaries to pay higher premiums.

The full text of "Medicare in the 21st Century: A Prescription for Change from America's Internists" is online at

The second paper, which was also released in March, details the College's recommendations for modernizing the Medicare program.

According to the paper, ACP-ASIM supports combining Medicare parts A and B under a single deductible; covering preventive care, screening services and geriatric assessments; creating stop-loss coverage for all Medicare-covered services so patients won't face catastrophic costs; and reimbursing for physician-directed disease and case management.

The position paper also states that the College supports creating a prescription drug card program as a first step to helping seniors with drug costs. The College recommends that under a prescription drug card program, however, pharmacy benefit managers be required to pass on manufacturer rebates to pharmacies, which can then extend cost savings to beneficiaries.

The College's "Medicare Reform Recommendations" paper is available at


ACP-ASIM recommends Medicare regulatory changes and revisions to pay formula

In late March, the College sent recommendations on changing Medicare regulations and the physicians' pay formula to a group that advises the Centers for Medicare and Medicaid Services (CMS).

While the College applauded several new developments from CMS' Physicians Regulatory Issues Team (PRIT) initiative, it recommended that CMS make its correct coding initiative edits available online.

ACP-ASIM also called on CMS to revise the "Stop Fraud" message that beneficiaries receive on their summary notices. The College claims that the current message causes unnecessary suspicion of physicians.

Regarding the physicians' pay formula, ACP-ASIM said that CMS' proposed changes to the sustainable growth rate formula it uses to devise physician pay are inadequate. The College has recommended several further changes, including the use of multi-factor productivity instead of labor productivity only; more realistic assumptions about utilization growth; and a one-time adjustment to account for rising professional liability insurance premiums.

For more, see "Recommendations on Sustainable Growth Rate and Regulatory Burden" online.


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