In the past two decades, the cost of healthcare has grown exponentially. In 2007, approximately $2.5 trillion was spent on healthcare accounting for more than 2.5 % of the country’s GDP. The future viability of healthcare expenditure has generated heated debate among policy-makers, healthcare professionals, and Medicare beneficiaries. The Centre for Medicare and Medicaid Services (CMS) and the principal government administrator of Medicare propose cost-cutting measures trying to ensure future viability and sustainability of the health fund that receives widespread acclaim from policymakers. According to Issues Facing America: Medicare, CMS’s proposals include “pay for performance, gain sharing, and liability reform, which they believe will tremendously influence the present delivery of health care” (Ranawat, Anil, and Nunley, Ryan).
For several decades, policymakers have attempted to control the rising costs of the Medicare budget. However, they have terribly failed to “fix physician healthcare reimbursement fee schedule”. This has made the financial viability of Medicare programs, the most pressing issue in America’s politics. In fact, for several years, the rising cost of Medicare expenditure has created difficult procedures of reimbursing medics and hospitals. Consequently, the medical association has called upon the government to restructure the payment criteria for doctors. Medics are afraid that if the government fails to restructure their payment formula, they are likely to lose almost 30 percent in reimbursements next year, and this will push a significant percentage of physicians out of the program.
In Issues Facing America: Medicare, Ranawat and Nunley affirm that the scheduled payment formula for physician fees corresponds to volume changes. For example, if the volume of services increases, the annual update determined by CMS will decrease in order to offset the level of reimbursement. Alternatively, if the volume shrinks, the update will increase. The detrimental consequences of “physician fee schedule (PFS) and sustained growth rate (SGR) were first felt in early 2000 when doctors received a six percent reduction of their reimbursement costs”. The flaws in SGR have persisted for almost a decade forcing the Congress to sustain the Medicare program by passing temporary measures every year. For example, in 2003, the Congress permitted CMS to correct accounting mistakes identified in 1998 and 1999. This made the government to pay more than $54 billion to the Medicare physician program preventing another year of cutting reimbursements to physicians, nevertheless the legislation failed to solve the core of the problem. As a long-term measure, the Congress passed the “Provisions in the Medicare Prescription Drug and the Modernization Act” of 2003, which authorized CMS to raise the conversion factor by 1.5 percent in the next two years. However, it failed to provide extra funds to pay for this provisional fix. Consequently, the incurred extra funds are to be repaid together with interest back to the Medicare program within a period of 10 years.
In order to control Medicare expenditure for hospital reimbursements, the government has established a prospective payment system, which oversees and implements government policies in Medicare programs. This has created “a set of diagnosis-related groups [through] which physicians are reimbursed based on predetermined fees” (Hilzenrath). This has raised uproar amongst physicians, particularly from Texas who have openly declared that they would withdraw from the Medicare program unless the Congress agreed to substantial cuts in reimbursement payments. In his article, Half of Texas Doctors May Quit Medicare if Cuts Enacted, Survey Finds, Branch argues that the cut could deeply hurt elderly beneficiaries who are likely to lose access to their physicians and consider it extremely difficult to find new ones. In fact, the consequences of severity of the standoff are already imminent because most physicians have stopped accepting new patients on the Medicare program. In addition, Tricare beneficiaries will face similar consequences since its reimbursement rates are reliant on the Medicare program.
Finally, it is important to observe that the ratification of the health care reform policy was crucial in extending the viability of the Medicare Trust Fund. However, the Medicare beneficiaries’ health is at stake if the Congress fails to stop cuts in physicians’ fees, which are scheduled to be effected next year.
Branch, Alex. “Half of Texas doctors may quit Medicare if cuts enacted, survey finds.” Star-Telegram. 2011. Web.
Hilzenrath, David. “More Problems Than Solutions in Medicare Report.” Washington Post. 2009. Web.
Ranawat, Anil, and Nunley, Ryan. “Issues Facing America: Medicare.” American Academy of Orthopaedic Surgeons. 2008. Web.