CMS eyes physician payments but focuses on other problems

Concerns over Medicare managed care, prescription drugs and legislation occupy front burner.

By Markian Hawryluk, amednews staff. Sept. 24, 2001.

It's just too early for Medicare officials to worry about the physician payment update.

Facing a number of high-profile legal setbacks, the Centers for Medicare & Medicaid Services is focusing on salvaging its managed care program, making prescription drugs more affordable for seniors, and passing legislation to reform the Medicare program, leaving a possible cut in physician payments aside until final economic data are available.

Speaking to reporters on the payment update and other Medicare issues, CMS Administrator Tom Scully expressed concern over the possibility of a negative update of Medicare physician payments in 2002, but cautioned it was still too early to know how payment would be affected next year.

"I am concerned and I've looked at it extensively," Scully said. "At this point, I can tell you nobody knows what the update is going to be next year."

Scully said once the update for 2002 is determined, the agency would consider whether any action is needed.

"It's certainly something we're focused on, and if it needs regulatory or legislative relief, as soon as we're certain we're there, we'll talk it over," Scully said.

The AMA believes that it is likely to happen.

An Association estimate of the economic data indicates that physicians could be looking at cuts of 2% to 3% in 2002.

AMA officials have warned that a payment cut could be the final straw for many physicians already unhappy with the program's extensive regulations and could intensify the trickle of physicians already declining to accept new Medicare patients.

Presumably, CMS could try to offset the impact of a cut in payment by easing the regulatory burden on physicians. CMS is trying a similar tact with Medicare managed care plans but has run into some difficulties.

Limited choices

Laws passed in 1997 to create the Medicare+Choice program and give seniors an array of new coverage options and new benefits have unintentionally created the opposite effect.

"We felt that without some significant action, the options for seniors were going to drop a lot," Scully said. "We were told repeatedly, if plans are required to make up their minds by July 1, then a lot of them were going to drop out. They just didn't have enough data to make a decision as to whether to stay in or out."

So CMS moved the filing date for managed care plans as far back as it could -- to Sept. 17 -- to give plans every opportunity to remain in the program.

That, however, made it nearly impossible for CMS to meet a statutory deadline for mailing plan information to beneficiaries by Oct. 1.

CMS opted instead to provide much more detailed comparative information on its Web site as well as to create a toll-free number. The agency plans to promote them with a $30 million advertising campaign starting Nov. 17.

Not good enough, said several consumer advocacy groups. They sued the Dept. of Health and Human Services to force it to adhere to the Oct. 1 mailing deadline. The judge agreed, and CMS will now send a supplemental mailing in mid-October.

"The bottom line is the consumer is going to get a lot more information -- a lot, lot, lot more information -- a little bit later," Scully said.

Rx cards face legal challenge

The Medicare+Choice ruling is not the only legal setback for the agency this summer.

In September, a judge ruled CMS did not have the legal authority to issue Medicare discount drug cards without congressional approval. Under a plan touted by President Bush earlier this year, private pharmacy benefit managers would offer beneficiaries discount drug cards that Medicare officials expected could save seniors as much as 40% off the cost of prescription drugs.

"Everybody thought we had the legal authority to do it," Scully said. "We thought we had a creative way to get a first step. We're disappointed that at least temporarily it's been slowed down."

Scully was unsure whether the Justice Dept. would choose to appeal the ruling but indicated the administration would seek limited authority from Congress to issue the cards.

Indeed, a day after the court ruling, Sen. Bill Frist, MD (R, Tenn.), announced he would introduce legislation to authorize the cards.

The discount card has been decried by Democrats as a meaningless benefit that would not solve the prescription drug crisis for seniors. But Scully says CMS always envisioned the card as an administrative first step to provide some relief to seniors before lawmakers could agree on a full-fledged prescription drug benefit.

"We're still totally committed to pushing forward with Congress, as fast as we can to do a Medicare reform and a prescription drug benefit bill this year, and I think there's still plenty of hope that will happen," Scully said. "We never looked at [the discount card] as any substitute to that."

Scully still believes Congress will agree on a drug plan and Medicare reform, in spite of the latest economic data that shows a shrinking surplus -- or perhaps because of it.

"I think the fact that the numbers are tighter may in fact increase the likelihood that this might happen, because people get a little more restrained," Scully said.