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Thursday, December 14th 2006

Medicare Reimbursement

So, I was surprised this lame duck Congress saved physicians from the SGR. I already commented on that already, but I hadn’t seen this article painting the AMA as ungrateful and pressed on both sides (H/T Kevin, MD), seeing as the stop gap for the SGR cut has some P4P/Quality Reporting steps in it.

Its my view that the AMA has been might concessionary on pay for performance. Even that has drawn some “blow back” as the article says, from other physician groups.

But for pouting about the reimbursement consequences of the Sustained Growth Rate formula and Pay-for-Performance, maybe what we really should be worrying about is the MMA’s “trigger” spending cuts. A critical executive summary of the trigger is found at the Kaiser Family Foundation.

The MMA called for the Medicare Trustees to compile a report on the financial condition of Medicare every year using a new measurement – how much of Medicare spending was financed with general revenues (aka income taxes). Most people think of Medicare as “self funding” – you pay a payroll tax for it, and enrollees pay a premium (which are now progressive for Part B). Those incomes don’t nearly rise up to meet the cost of Medicare which must be supplied with revenue from general income taxes every year to pay for the health of this country’s elder generations.

For whatever reason, the author’s of the MMA decided that when Medicare recieved >45% of its funding from general revenue, it was a bad sign. For the first time ever, in March of this year, the Trustees identified that this scenario had been met. If it happens two years in a row the MMA requires Congress and The President to present a timely budgetary solution. And while it doesn’t lay out the specific fix; the fix could involve reduction in benefits for enrollees or fee cuts for physicians and other health care entities.

I’m not totally sure what to make of this. No politician wants to cut benefits considering this may seriously be the most powerful lobby in the country, just so that Medicare comes in under some arbitrary general revenue funding number. And the seeming vagueness of the requirement wonders if Congress will be able to prompt itself to effective action.

Still it is an interesting provision of the Medicare Prescription Drug, Improvement, and Modernization Act which I had never heard of. And one we should definitely be keeping an eye on.