Medicare Crisis Worsens; Congress Adjourns

By James R. Hood
Caregivers USA News

November 4, 2002
Medicare payments to doctors and home health care agencies will be cut Jan. 1 unless Congress acts in a lame duck session or the Bush Administration finds a way around the problem. The cuts, which stem from a formula adopted by Congress in 1997, are giving the Bush Administration a major election-week headache but it appears unlikely a quick solution will be found.

Both Medicare administrator Thomas A. Scully and his boss, Health and Human Services Secretary Tommy G. Thompson, insist that their department does not have the statutory authority to reverse the changes, putting the issue back in the lap of Congress, which will not be back in session until after tomorrow's elections.

Thompson said he is "very concerned" about the cuts and said it has been examined by senior attorneys in the Justice Department and the White House, to no avail.

The reductions are likely to prompt further cutbacks in home health care services and drive even more doctors out of the Medicare program, leaving their elderly patients scrambling to find physicians. Medicare payments to doctors were reduced 5.4 percent in January and another reduction of 4.4 percent will take effect Jan. 1, 2003.

Despite its protestions of helplessness, the Bush Administration has known about the situation since at least early this year. Mr. Bush wrote the cuts into his budget last February and made not effort to halt or delay them.

Congress' efforts to fix the problem were paralyzed by the conflicting demands of various industry and consumer advocates, including:

• Hospitals and HMOs Their costs have also risen and their lobbyists are insisting that, if doctors' fees are increased, theirs must be too;
• Nursing homes Like hospitals, nursing homes want reimbursement for rising costs and will protest loudly if home health care agencies' rates are increased and theirs are not;
• Senior groups and consumer advocates They insist that, before Congress helps doctors, it must provide prescription assistance to seniors.

Some lobbyists have blurred the issue by failing to note that doctors and home health care agencies' fees are being reduced, while fees paid to hospitals, nursing homes and others are not.

AARP has tried to embrace both positions, saying that Congress should not increase Medicare payments to health care providers unless it also addresses prescription coverage. But it stipulated that "errors of miscalculations in Medicare payment formulas should be corrected."

The current crisis, in fact, results from a miscalculation by government economists who underestimated the number of people who would be in Medicare's fee-for-service program and also failed to adequately allow for the economic growth of the late 1990's.