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The Medicare challenge

The program needs to compensate doctors fairly while still managing to keep costs under control. And retirees need help with the rising cost of premiums.

A Times Editorial
Published August 12, 2005

Even the boy who cried "Wolf!" was right once. So while it is difficult to take the American Medical Association seriously when it exaggerates the threat of declining Medicare payments, a legitimate concern is lurking.

Shame on the AMA for its recent ad that warns darkly that "access to health care for seniors is in great jeopardy." Doctors aren't going to suddenly close their doors to older patients even if Medicare fees do decline.

Yet the program faces a difficult challenge to compensate doctors fairly while keeping costs under control. And despite its tactics, the AMA is right when it says the current formula for setting physician fees is flawed.

The formula is so complex that even experts don't fully understand it, but this much is clear: While medical costs are rising, Medicare payments are headed in the opposite direction. It is projected that over the next six years, doctors will be paid a cumulative 26 percent less for treating Medicare recipients.

The main culprit is overspending on Medicare in years past, which under the formula limits payments in the future. That creates a self-defeating cycle. If doctors know their payment per patient is going to be cut, they are inclined to increase the volume of fee-generating services. That can result in more procedures and testing (such as magnetic resonance imaging), which account for much of the increased spending.

Three bills pending in Congress would reverse declining fees and create a more realistic formula. The Medicare Payment Advisory Commission (MedPAC) - which advises Congress on the issue - has proposed a system of payments that are "adequate to maintain Medicare beneficiaries' access to necessary high-quality care." MedPAC's emphasis is on the efficiency of preventive care and the avoidance of unnecessary or redundant testing.

Those are noble goals, though difficult to administer and initially expensive. Even temporary measures to bolster payments to doctors would cost billions of dollars. However, this Congress and the Bush administration know no limits on government spending, having just passed and signed energy and highway legislation that far exceeds announced spending restraints. Health care for older citizens is at least as worthy a cause.

One thing left out of the legislation that should be added is help with the rising cost of premiums paid by recipients. Retirees are even less able than doctors to pay for Medicare's shortcomings.

[Last modified August 12, 2005, 00:46:18]


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