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Why Healthcare Reform Is Good For Medicare

You may have noticed, uncharacteristically for me, that I haven’t posted a blog in week. I thought it would be better to allow the readers to post their own reflections, and you did — with comments ranging for unabashed pride to skepticism to disdain for the law and the American College of Physician’s (ACP’s) role in bringing in about.

I respect the principled arguments made by those who believe that the legislation gives the government too much control or those who fear that it will add to the deficit and public debt, even though the Congressional Budget Office (CBO) says otherwise. But there is one claim made by some of the critics that sticks in my craw, which is that the legislation will result in “massive cuts” to Medicare. Here are the facts. 

Seniors in the traditional Medicare program will get better benefits because of the new law. The Medicare Part D “doughnut hole” will be phased out, starting with a $250 rebate check this year. Later, Medicare will begin covering preventive services, like check-ups and screening tests, with no co-payments or deductibles. The law actually prohibits cuts in Medicare’s mandated benefits. Some seniors in Medicare Advantage plans might see a loss of optional benefits, like eye glass coverage, if their health plan decides to trim benefits to offset lower Medicare payments. But the fact is that the overwhelming majority of seniors in the United States will have lower out-of-pocket costs and better coverage.

What about the $500 billion “cuts” in Medicare? Well, for one thing, they aren’t cuts, but reductions in the rate of increase paid to some non-physician providers over the next ten years. Hospitals will get smaller annual “market basket” inflation increases. They also will see gradual reductions in their disproportionate share payments, which cover the costs of indigent care, because they will have fewer indigent patients to treat and less uncompensated care. (These cuts were agreed to by the major trade associations representing hospitals.) And the law corrects that long-standing over-payments of Medicare Advantage plans, which up until now were able to charge the federal government more for taking care of seniors than a physician or hospital in traditional Medicare.

And, guess what, the $500 billion in Medicare savings actually extends the life of the Medicare Hospital Insurance Trust Fund. By spending less over the next decade, the Trust Fund won’t run out of money in 2017, as previously forecasted by Medicare’s actuary. Instead, it is now expected to remain solvent until 2026.

Many physicians will see higher payments under the legislation. General internists and primary care physicians will get a 10% Medicare pay increase for their office and other outpatient visits, beginning in 2011, as long as such visits constitute 60% of their total Medicare allowed charges. And in years 2013 and 2014, Medicaid payments for visits and vaccines by primary care physicians will be increased to no lower than the Medicare rates. ACP fought long and hard to get both provisions included in the final law.

There are a few provisions that could result in reductions in payments to some physicians in future years: payment penalties for not participating in Medicare’s Physician Quality Reporting Initiative; a “value index” that beginning in 2014, might lower payments to physicians with higher costs and poorer outcomes; and the possibility that an Independent Payment Advisory Board could recommend additional reductions. ACP has expressed concern about each of these provisions, and we will seek to change them in future legislation. But the fact remains that the legislation will spend billions of dollars more to increase payments for primary care, while physicians were mostly exempted from more cuts.

Yes, physicians are still facing potential cuts from the Medicare’s SGR formula. But these cuts were the result of a formula enacted by Congress back in 1997, and that successive Congress — no matter which political party was in control — have failed to correct. President Obama, at least, has proposed to repeal the SGR and to accurately account for the costs of repeal in his budget. Yes, the Senate still needs to act to permanently repeal the SGR, as the House has already voted to do. But the idea that the SGR cuts are the result of the health care reform legislation is silly, when doctors would have been facing the cuts even if health reform had never seen the light of day.

The bottom line is that health reform law is a good deal for Medicare seniors, because it will lower their out-of-pocket costs, expand coverage for preventive services, close the doughnut hole, extend the life of Medicare Part A, and even pay their primary care physicians a bit more.

Today’s question: How do you think the new health reform law will help or hurt Medicare patients?

*This blog post was originally published at The ACP Advocate Blog by Bob Doherty*

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