May 2003

More Medicare problems

by Dr. Jeffrey Shay

While the networks and news agencies have concentrated on the war in Iraq, Medicare news continues to be ignored, even though it has a more direct influence on most Americans.

A new report shows that Medicare is headed for bankruptcy, with insolvency now scheduled for 2026. The reasons are three‑fold: longer life expectancy, high medical costs, and lower revenue from payroll taxes.

The administration's answer so far has been to push privatization, based on the model of the Federal Employee Health Benefits Program (FEHBP), which offers a variety of plans with a choice of services. Some provide options such as open PPOs, while others are limited programs such as HMOs.

Presently, Medicare has only two options for recipients: fee‑for‑service or Medicare HMOs. These HMO plans, it should be noted, are not available in many areas, like Iowa and Maine.

Of course, this program has experience with only relatively young and healthy people, namely federal employees. Medicare constituencies are a whole new ball game -- they're older and have more illness, as well as more serious conditions overall, making the odds for its success are very good. While FEHBP operations were more successful than Medicare for many years, the reverse has been true in the last few years, with FEHBP initiating a number of rate increases.

President Bush also wants to use his new system to add a prescription drug benefit to Medicare, in this way avoiding an omnibus benefit added to the whole Medicare system.

Drug coverage, while politically popular, could very well destroy federal health care programs financially. Historically, many independent insurers (e.g. Blue Shield of Michigan) have paid more for provider fees than for drug benefits. Now the situation is reversed, as many companies are paying more for prescription drugs than for doctors. It is privately estimated that giving Medicare patients the same drug benefit given to federal employees would cost $750 billion over 10 years, while the government estimates only $400 billion for the same period.

This is not to mention other costs unique to the private sector. In America, to quote the Des Moines Register, (H)ealth care is delivered by private industry that vies for profits, caters to stockholders, pays huge CEO salaries, and spends big bucks on marketing. Administrative costs in the private sector average 15% and range as high as 30% in a few companies."

This system could pose particular problems for chiropractors. Just as Medicare HMOs have often tried to blind‑side chiropractors in order to benefit physical therapists and medical practitioners, so would this system be fraught with the same problem.

Any major change would find tough opposition in Congress, the result being that any bill passed would be limited in scope. From the patient's perspective, fee‑for‑service coverage would be the best option. Either way, expect Medicare to respond by further reducing provider fees and alter (read reduce) treatment guidelines under the guise of protecting the public from "fraud and abuse."

President Bush has also announced other inventive ways to balance his budget. One is to charge user fees to doctors who submit Medicare claims with errors extant. There would be no penalty for errors by Medicare. He made this announcement shortly after he expressed concern over rising malpractice rates for doctors. The government's true aim seems to be to penalize doctors, while at the same time posing as their friend.

Next on the agenda: benefit denials. The present administration is planning major changes in the Medicare program, viz, to make it more difficult for beneficiaries and providers to appeal denial of benefits.

Over the last few years, federal judges have repeatedly ruled against the government and, consequently, for thousands of Medicare beneficiaries and providers after they had payment for services deemed unnecessary by the Medicare system. Medicare lost 53% of cases that came before the courts after repeated denial of services. The judges that handled these cases were independent, impartial adjudicators who make their findings on the basis of the facts, and not on shifting internal policies.

President Bush is proposing legislation to limit the judges' independence, and even replace some who are guilty of repeated verdicts in favor of the public. Replacing them would be a system of hearing officers and lawyers who are employees of the Department of Health and Human Services; the system would change to concentrate on enforced arbitration.

This proposal has been denounced by judges, lawyers, consumer groups, and health care providers. This is not the first time the government has tried this tactic, as a similar attempt was made by the Reagan administration in 1983, but was defeated by a lawsuit filed by the Association of Administrative Law Judges, stating that the proposal would put "improper pressure on them to deny benefits to people with disabilities". After a similar finding by a Federal District Court, Medicare dropped the proposal.

The hard truth here is that the government is trying to balance its budget at the expense of the elderly and their health care providers. Whatever your feelings may be about the war in Iraq, these policies will force doctors and patients to pay for it with more than just tax dollars.

(Dr. Jeffrey Shay, a graduate of Palmer College of Chiropractic and the WCA's 1996 "Chiropractor of the Year," is the World Chiropractic Alliance Director of Insurance Relations. He welcomes comments or questions regarding any insurance-related subject appearing in this column. Dr. Shay is available to speak to your state or local organization. Contact him at 1300 Cedar St., Muscatine, IA 52761, or the WCA offices, FAX 480/732-9313.)