Congressional Debate Over Medicare Reform Threatens to Eliminate Favored Provisions

Strategic Insights -

Congressional Republicans and Democrats continue to navigate the complex process of Medicare reform, with several provisions favored by the American Medical Association and physician groups at risk of being eliminated. Despite fervent efforts by the AMA and other organizations, tort reforms and revised rules for provider service organizations (PSOs) appear to have been dropped from the bill. Provisions to relax Medicare's clinical lab and self-referral standards are also facing potential challenges.

Key Takeaways:

  • Several provisions favored by the American Medical Association and physician groups are at risk of being eliminated from the Medicare reform bill, including tort reforms and revised rules for PSOs.
  • The House bill had exempted most physician labs from the requirements of the Clinical Office Laboratory Improvement Amendments, but this provision was dropped in conference committee negotiations.
  • The Senate had offered a substitute that would have eliminated oversight for about a third of physician labs and scaled it back for another quarter, but this was rejected by the House conferees.
  • Language facilitating the creation of physician-run health plans is being rewritten to meet objections from the insurance industry and state regulators.
  • The bill is expected to set physicians' share of the savings at between $22.6 billion and $26.1 billion over the next seven years.
  • The measure will also include a so-called fail-safe that would tap hospitals and physicians for additional savings if migration to managed care and other elements of the bill fail to meet savings projections.
  • The Byrd rule has been a key obstacle for physician groups, as it requires a simple majority to adopt items attached to budget measures, but can be waived with a 60-vote majority.

Statistics:

  • $270 billion: the amount of Medicare savings expected over the next seven years.
  • 6.4%: the projected annual growth in Medicare, down from 10% under current law.
  • 31.5%: the monthly premium as a percentage of costs.
  • 46.10: the current monthly premium.
  • $92: the expected monthly premium in 2002.
  • $47 billion: the amount of revenue expected to be raised by maintaining monthly premiums and allowing them to rise to 31.5% of costs.
  • $8 billion to $13 billion: the additional revenue expected to be raised by requiring affluent beneficiaries to pay a higher share of costs.

Sources:

  • "Congress maneuvers away from AMA's Medicare wish list". On Congress, 14 Nov. 1995.
  • "Tort reforms may be stricken from Medicare bill".
  • "Byrd rule delays AMA-backed antitrust proposal".
  • "AMA: Analysis of the Medicare and budget bills as reported from the Senate Finance Committee".