News in brief - June 16, 2003

Lawmakers call for Medicare physician formula changes - Medicare recoups more fraud dollars than Medicaid - Physicians plead for Medicare carrier funding - Medicare rules bad for the uninsured - Congress drops Medicare rural payment fairness

Lawmakers call for Medicare physician formula changes

The Centers for Medicare & Medicaid Services should change the way they calculate Medicare physician payment to remove the impact of Medicare-covered drug spending, say a key pair of Republican lawmakers.

In a letter to CMS, Reps. Billy Tauzin (R, La.) and Mike Bilirakis (R, Fla.) called on the agency to use its administrative authority to remove drug costs from its calculation of physician services spending. When spending exceeds CMS estimates, as it did in 2002, future doctor payments must be cut to make up the difference.

Medicare pays for outpatient drugs only when they are administered in conjunction with physician-provided services, such as the office-based administration of chemotherapy. Spending for those drugs, however, has risen 242% between 1996 and 2002 and has contributed to a projected 4.2% cut in physician payment in 2004.

Medicare recoups more fraud dollars than Medicaid

Medicare fraud units collected more than 20 times more money through its fraud recovery actions in 2001 than did Medicaid fraud units, said a pair of studies by Taxpayers Against Fraud Education Fund.

Total Medicare collections exceeded $1 billion in 2001, up 72% from the previous year. Medicaid recoveries totaled $43 million that year. Medicare recoveries were boosted by a $745 million agreement by HCA Inc. to settle civil allegations of Medicare and, to a lesser extent, Medicaid fraud. The discrepancy in fraud recoveries is more than just a one-year aberration. Between 1997 and 2001, the federal government recovered $2.85 billion in Medicare funds, compared with $115 million in Medicaid funds.

"The good news is that fraud recoveries are saving taxpayers billions of Medicare dollars," said James Moorman, president of TAFEF and a former U.S. assistant attorney general. "The bad news is that we're not doing as well on Medicaid fraud. We need to fight Medicaid fraud more effectively, and to do that, we must make better use of the False Claims Act."

Physicians plead for Medicare carrier funding

Congress should appropriate adequate funding levels for Medicare carriers to carry out their claims processing, enrollment and physician education activities, a group of 58 physician organizations said in a letter to Rep. Ted Stevens (R, Ala.), chair of the Senate Appropriation Committee.

The Bush administration has recommended $2.5 billion in funding for carriers in fiscal year 2004, an increase of $29 million from the previous year.

"These organizations assure that Medicare claims are paid promptly and correctly," the groups said. "In an era of lower payments to physicians, it is critical that those payments be timely and accurate."

The groups were particularly concerned about a proposed 85% cut in funding for physician education training. With new enrollment procedures, transaction standards and Medicare reform going into effect in the next year, assistance from carriers will be critical to maintaining smooth operation of the Medicare program, the groups said.

Medicare rules bad for the uninsured

Regulations designed to ensure that Medicare patients are not billed at a higher rate than other patients often have the unintended consequence of discouraging physicians from offering discounts to uninsured patients. In fact, the rules may lead to these patients paying higher than Medicare prices, according to a new report from the Commonwealth Fund.

The report, which was prepared by the Access Project at Brandeis University in Boston, concludes among its findings that "federal fraud and abuse laws and Medicare regulations and guidelines designed to prevent overbilling and the provision of unnecessary care may inadvertently inhibit providers from offering reduced-cost care and encourage providers to aggressively attempt to collect on both Medicare and uninsured patients' outstanding bills."

A previous report from the project found that many uninsured patients end up costing the health care system more money because they delay going to the doctor because of outstanding medical debt.

Congress drops Medicare rural payment fairness

Efforts to raise rural physicians' Medicare payment rates to the national average faltered when House and Senate negotiators agreed to drop the Senate-backed provisions from the final version of a tax bill passed by Congress in May.

The provisions, added to the bill by Sen. Charles Grassley (R, Iowa), would have eliminated any reductions in doctor payments stemming from the geographic adjusters in the Medicare physician payment formula. House Republicans strongly objected to keeping the Senate-passed measure in the final version of the tax bill. Ways and Means Committee Chair Bill Thomas (R, Calif.) said he preferred to deal with Medicare changes in a Medicare reform package.

In exchange for agreeing to dump the rural payment measures, Grassley secured a letter from President Bush backing his proposed changes. Grassley, chair of the Senate Finance Committee, intends to include the measures in a Medicare reform bill to be considered by the panel in June.

Tom Scully, administrator of the Centers for Medicare & Medicaid Services, said the administration was considering some of the rural health provisions proposed by Grassley. But CMS could not change the geographic adjusters in the physician pay formula without a congressional mandate.

"I've said repeatedly that some of the rural arguments are pretty solid," Scully said. "We're just trying to avoid everybody lining up to get their Medicare cuts back."