| Medicare reimbursement cuts have skyrocketed since | | | | recent years, the total expenses and federal |
| Medicare's beginning in 1965, despite many different | | | | reimbursement has exceeded the goals that have |
| measures to control growth. Short-term legislative | | | | been set. The growing size of Medicare threatens to |
| fixes have been buying time in order to develop | | | | infringe upon other fund sources and programs. To |
| long-term solutions while numerous stakeholders stand | | | | reform Medicare and keep expenses within |
| to win and lose as they deal with reimbursement cuts. | | | | manageable boundaries, it is in the best interest of the |
| Among these stakeholders are politicians, the federal | | | | federal government to take charge. Regardless of the |
| government, Medicare recipients, healthcare providers, | | | | benefits involved in implementing cuts, the types of |
| and third-party payers. There are anticipated problems | | | | cuts made have potential repercussions. Cuts to |
| in implementing reimbursement cuts, including obstacles | | | | reimbursements are controversial within the healthcare |
| to patient care and the financial capability of healthcare | | | | community, so the federal government must implement |
| providers who rely on Medicare revenue. Continual | | | | responsible controls to ease harm and allow reform. |
| questions over short-term Medicare cuts will be | | | | Politicians are another group that is affected by |
| eclipsed by policy modifications related to the | | | | reimbursement cut policies. Their role is fairly involved |
| program's ability to sustain long-term healthcare funding | | | | as their responsibilities and functions are reflective of |
| and delivery systems. | | | | the interests of different groups and political parties. |
| Introduction | | | | Reduction of expenses and reimbursement cuts |
| Currently health care spending accounts for 16% of | | | | affect constituents in many ways. In political |
| the gross domestic product of the United States | | | | decision-making, the role of Medicare reimbursement |
| (Getzen, 2007). Overall health care spending and high | | | | cuts depends on how these groups are affected, and |
| health care costs are due to new technology and | | | | the amount of healthcare lobbying that happens on |
| higher incomes. This raises the question, how are | | | | Capitol Hill shows the magnitude of the interests |
| health care expenses going to be controlled within | | | | involved. |
| government programs like Medicare? The | | | | Additionally, third-party payers are heavily influenced by |
| development of Medicare and Medicaid by the Social | | | | Medicare reimbursement tactics. Medicare |
| Security Acts of 1965 recognized the government as | | | | reimbursement cuts may mean reimbursement cuts |
| a major financier in health care. Hospitals and other | | | | by other third-party payers, thus adding to many of the |
| institutions were allowed to grow in size, capacity, and | | | | problems that healthcare providers experience. |
| capital due to regular reimbursement through | | | | Understandably, Medicare recipients are another |
| government funding. | | | | leading group affected by cuts because that means |
| Background and Significance | | | | the reduction of programs and benefits to these |
| Medicare has progressed in numerous ways since its | | | | recipients. Patients have been provided with a vast |
| beginning in 1965. Initially, physicians were compensated | | | | array of services, procedures, and pharmaceuticals |
| by the program for services covered and were able | | | | due to technological advancement. If benefit and |
| to bill their patients for costs that were not covered. | | | | program cuts occur, these technological features will |
| Hospital compensation plans also followed similar | | | | be greatly reduced. Reimbursement cuts may also |
| patterns until a modification was made in 1983 from | | | | play a part in preventing easy access to care. New |
| "reasonable cost" to the prospective payment system | | | | Medicare patients may be less likely to be accepted |
| based on groups that were diagnostically-related. In | | | | by providers due to lower reimbursements from |
| 1992 the charge-based system was replaced by the | | | | Medicare. In the short-term seniors will always suffer |
| physician fee schedule. To control spending even | | | | from reimbursement cuts but they may benefit in the |
| further, the Sustainable Growth Rate (SGR) of 1998 | | | | long-run from a more efficient delivery system resulting |
| was created. With this, the annual goals for spending | | | | from Medicare reform. |
| are established and physician payments are reduced if | | | | Physicians and hospitals will always lose in the |
| spending goes over these limits. | | | | short-term. The healthcare community does not agree |
| The majority of today's Medicare costs are unlike | | | | with current reimbursement models and believes that |
| those of the past. A large percentage of the | | | | any additional cuts will significantly wear down |
| expenses are attributable to outpatient services | | | | revenues. Many physician practices and hospitals will |
| covered by Medicare Part B. This percentage has | | | | be greatly affected but they may benefit in the |
| consistently exceeded the established formula that is | | | | long-run from programs that are moderated in growth. |
| specified in the SGR. Imminent adjustments that come | | | | Implementation issues |
| in the form of reimbursement cuts mean major | | | | There are many groups engaged in searching for |
| problems for any physician that receives | | | | answers to this problem, including the Medicare |
| reimbursements for services provided to their | | | | Payment Advisory Commission (MedPAC), the |
| Medicare patients. These cuts will have a major | | | | Government Accountability Office, physician and |
| impact on hospitals and physicians, and they may | | | | hospital organizations, economists, and other interest |
| worsen access barriers to healthcare for Medicare | | | | groups. The U.S. Senate and House of |
| recipients. New reimbursement cuts are especially | | | | Representatives are working separately on ways to |
| troubling in light of evidence that the expansion of | | | | reduce the irregularities in expenses and |
| Medicare reimbursements to new areas of care can | | | | reimbursements while trying to set up long-term |
| benefit patient health (Gross et al., 2006). Legislation | | | | solutions to these issues. One of the most significant |
| and actions on Capitol Hill generally determine the | | | | challenges to implementation is the financial domino |
| types and amounts of cuts to be made. | | | | effect to providers relying on reimbursements |
| Legislation | | | | (hospitals, physicians, providers). Medicare health |
| Legislative action related to Medicare cuts is unending. | | | | insurance accounts for a large part of revenues to |
| A recent (February 14th, 2008) amendment was | | | | health facilities and healthcare providers. Any lessening |
| proposed in the House of Representatives to amend | | | | of reimbursements for services will generate a major |
| conversion factors in Part B of title XVIII of the Social | | | | financial impact and the healthcare community has |
| Security Act, which increased Medicare payments for | | | | been very resistant to any additional cuts. Some of the |
| physicians' services through December 31, 2009. | | | | noisiest groups have been health providers and interest |
| These modifications are temporary fixes in the | | | | groups affiliated with them. |
| challenge to produce long-term solutions, and legislative | | | | Future direction |
| fixes are subjective to the various groups that are | | | | Reduction of Medicare reimbursement is a major |
| involved with these cuts. Congress is endlessly | | | | policy issue that affects a large section of interests. |
| tweaking legislation related to reimbursement in order | | | | Within the government it is acknowledged that more |
| to slow down uncontrolled growth while acknowledging | | | | time is required to generate sustainable strategies. The |
| the constituencies and interest groups. | | | | ability to balance long-term objectives with the |
| The executive branch also plays a major role in | | | | immediate effects of cuts is a sensitive matter. |
| Medicare cuts. Recently, the Bush Administration | | | | Policymakers must make calculated decisions when it |
| proposed a measure to control the elevated growth in | | | | comes to reducing healthcare spending. Some |
| the program. This change was initiated by a condition | | | | proponents believe that a greater concentration on |
| of the 2003 Medicare law. When a financial alert is | | | | preventive care can potentially alleviate expense |
| released by Medicare trustees, the administration is | | | | trends. A large portion of current expenses in |
| mandated to present legislation that reduces program | | | | Medicare and other programs comes from long-term |
| spending or increases revenue. | | | | maintenance of chronic conditions. This tendency |
| Stakeholders | | | | accounts for a large part of growth that is not |
| The major stakeholders in this Medicare issue are the | | | | controlled. These reimbursement cuts are only |
| federal government, politicians, Medicare recipients, | | | | temporary strategies in a losing battle, but a greater |
| physicians, hospitals, and third-party payers. The | | | | concentration on preventive care can potentially |
| federal government is in position to win by moderating | | | | extend the viability of U.S. healthcare systems. |
| the uncontrolled growth in the Medicare program. In | | | | |