Stakeholder Perspectives - Providers
Key Issues Raised by National Institute on Health Policy Paper on
Medicare Modernization Act Geographic inequities continue The vast majority of Medicare enrollees obtain services through the fee-for-service system of the Medicare program (87% nationally and 86% in Minnesota). All physicians in Minnesota receive the same payment for the same service, regardless of where the service is provided. Minnesota, however, receives less on a per service basis than many other parts of the country, as well as less on a per beneficiary basis, which reflects judicious use of health care services while consistently delivering among the highest quality care in the country. The MJC has long argued that the geographic differences in payments disadvantage Minnesota seniors when the availability of local dollars limits recruitment and retention of physicians, which could limit patient access. Although the MMA did provide for an adjustment in one of the geographic adjusters used to calculate the fee schedule (the “work” geographic practice cost index), that pr9ovision is scheduled to sunset after 2006. No permanent solution to fix or replace the flawed Sustainable Growth Rate (SGR) formula that determines updates to the physician fee schedule
Despite the inclusion of a temporary, two-year reprieve from cuts to the physician fee schedule (expected cuts of 4.5% in both 2004 and 2005 were replaced with a 1.5% increase in both years), the MMA fails to fix the underlying problem in the payment system. It is widely acknowledged that the SGR system, which permits Medicare spending for physicians’ services to increase by only as much as gross domestic product (GDP), a measure of the business cycle that bears no relationship to the health needs of patients, is an inappropriate measure of physician practice costs.
Hospital payment and access concerns persistImpact of new prescription drug benefit unclear, benefit variation likely
The new Medicare prescription drug benefit (Part D) takes effect January 1, 2006. The benefit will be delivered through Medicare Advantage plans (HMOs, PPOs, etc.) or through private insurance plans offering stand-alone prescription plans to beneficiaries that remain in fee-for-service Medicare. Coverage for prescriptions will be contingent on whether the drug is on the formulary for the particular plan chosen by the beneficiary. The current regulations would require that the plans’ formularies cover at least two drugs in each of the identified therapeutic drug classes. The composition of the formularies will be critical for beneficiaries, because drugs not on the formulary likely will mean higher out-of-pocket costs, yet non-formulary expenditures do not count toward a beneficiary’s total out-of-pocket costs for purposes of determining the overall prescription drug benefit. Due to variations in formularies, as well as the fact that the current regulations would allow for different access restrictions (e.g., use of prior authorization, step therapy, tiered pricing, etc.), the complexity and hassles that beneficiaries and physicians will face could be significant. |
Issues and Activism 
