Unfinished business: Congressional agenda 2004

From tort reform to health insurance access, lawmakers are likely to revisit health care problems they can't seem to solve.

By Joel B. Finkelstein , Markian Hawryluk — Posted Feb. 2, 2004

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The health care issues facing Congress this year are, borrowing the words of Yogi Berra, "like déjà vu all over again."

Although Congress passed the Medicare reform bill late last year, lawmakers were unable to make progress on many of the policy questions most important to physicians. Included in that list of unfinished business are tort reform, help for uninsured Americans and lasting relief for the financially troubled Medicaid program.

The Medicare reform bill's passage hasn't even taken that issue off the agenda, as many lawmakers are now intent on fixing what they view as major flaws in the law.

Here is a look at how debate on these unresolved issues is shaping up.

Medicare reform: Take two

There's a reason why most significant Medicare legislation over the past two decades has passed in odd years. Federal elections happen in even years.

With both congressional and presidential races looming in November, physicians can expect little definitive action on Medicare this year. But that doesn't mean lawmakers won't try. Most efforts will focus on fixing perceived problems with the Medicare reform package passed last year.

For physicians, the new Medicare law provides a two-year reprieve from payment cuts, but it necessitates further action to avoid draconian reductions in 2006. Congress likely will begin discussion on revamping the formula used to update Medicare's physician fee schedule.

That formula relies on estimates to establish a yearly spending target. If estimates are accurate, the target rises at the same rate as the gross domestic product. But if actuaries miscalculate or if spending for physician services misses the mark, the formula makes a correction in the next update. That has led to large payment increases and decreases over the years and has forced Congress to step in for the past two years to avoid deep cuts.

Alternatives include scrapping the formula and moving toward an inflation index similar to those used for most other health professionals serving Medicare.

Some lawmakers last year seemed to support removing drug expenditures from the formula's calculation of physician spending, but that idea ultimately was ruled out as too expensive. Physicians have argued that they have no control over the price of drugs covered under Medicare Part B and so should not be penalized when drug prices rise.

Efforts to rein in drug prices also have left oncologists concerned about Medicare payment. The new law lowers the price Medicare pays for drugs administered in physician offices and increases practice expense payments for that service. But many doctors contend that the net effect will be a big cut in spending for cancer treatment. The provisions were among the most controversial during last year's debate and are likely to be revisited, particularly if patient groups perceive a drop in access or quality.

"We want to work with Congress to make sure that people with cancer still receive the care they need and deserve," said Margaret Tempero, MD, president of the American Society of Clinical Oncology.

The Medicare law also provides relief for rural physicians by increasing the work expense portion of payments for areas below the national average and giving a bonus payment in areas where physician supply is low. Because those measures were temporary and fell short of full pay equity, rural physician payment and access issues are likely to come up again this year.

Democrats are targeting other parts of the law, which they see as providing an insufficient outpatient prescription drug benefit and a huge payday for private insurers.

"As more Americans figure out what a cynical bait-and-switch the special interests have pulled off, they will demand that Congress fix the serious problems this bill will create," said Senate Minority Leader Tom Daschle (D, S.D.).

Even some proponents agree that the gaps in prescription drug coverage pose problems for seniors and disabled people. Due to a limited amount of funds, Congress opted to help all seniors with drug costs under $2,250, with additional help for low-income beneficiaries and those with very high drug costs. That left a coverage gap for seniors with yearly out-of-pocket drug costs between $2,250 and $3,600.

AARP Executive Director Bill Novelli, whose support was key to the bill's passage, said the law does not do enough to help seniors afford prescription drugs. "This is the area where AARP must now focus our fight for improvements."

Congress is expected to consider proposals to help fill the coverage hole. But Republican aides who authored the drug plan say private insurers, both freestanding drug plans and Medicare managed care plans, in many areas of the country will be able to offer better benefits than those described in the bill. This means that fewer beneficiaries actually will be hit by the coverage gap, they say.

GOP staffers do not believe that even technical corrections of the law will be needed this year.

Tort reform: Try, try again

A battle over tort reform is again brewing in the Senate, which in past years has rejected legislation passed by the House.

But physicians' resolve to see legislation passed remains strong as they continue to watch colleagues retire early, cut services, or pack up and move their practices to other states.

The goal this year will be to develop a package that physicians believe will offer needed relief from medical liability insurance woes and have enough votes to pass the Senate. Right now, all options are on the table.

"Everyone agrees there is a problem," said American Medical Association President Donald J. Palmisano, MD. "Now the issue is what do you do to solve it?"

The two sides have very different views in that regard. Republicans have supported AMA-backed proposals that include the coveted $250,000 noneconomic damages cap that physicians say has kept liability rates low in California and caused Texas insurers to announce rate reductions after a measure passed there last fall.

But Democrats generally have sided with trial lawyers, who oppose caps. Instead, most trial lawyers and Democrats support patient safety measures or insurance reform. Last year, Senate Democrats stopped a bill that included a $250,000 cap.

Aware of the continuing challenge in the Senate, the AMA is now meeting with state and specialty medical societies to discuss the best strategy. Some physicians have suggested legislation that would provide noneconomic damage caps only to obstetricians and other specialists who have been hardest hit by rising premiums.

"What the actual bill will be remains to be seen," Dr. Palmisano said. "We will not support anything that would divide or diminish the House of Medicine."

Organized medicine will work with Senate leaders this year on the best strategy to pass legislation.

"We are all looking for what would be worth doing and what might get the needed votes," said Lucia Divenere, the American College of Obstetricians and Gynecologists' director of government relations and outreach.

Without compromise, political experts say tort reform is likely to meet the same fate in 2004 as it did in 2003.

"With the current makeup of Congress, it would be hard to get through the bill they tried to get through last year," said Randall R. Bovbjerg, principal research associate at the Urban Institute, an economic and social policy research group in Washington, D.C.

Compromise from both sides could advance the issue and create a better system, he said. Although it's not fair that patients with similar malpractice cases can have completely different courtroom outcomes, the $250,000 cap established in California in 1975 isn't fair either, Bovbjerg added.

"The middle ground has disappeared," he said. "Neither side is in a compromising mode, and that's a shame."

Universal access: The buzz builds

Lawmakers agree that the increase in the number of uninsured Americans is a problem that needs to be addressed this year, but how to solve it is likely to continue to be a sticking point.

The United States already spends more than any other country on health care -- an estimated $5,440 per person. That money is not spent very efficiently, with up to 40 cents on the dollar going to nonclinical expenses, said Sen. Edward Kennedy (D, Mass.).

Kennedy noted that $9,000 -- the going rate for a family health insurance policy in some places -- is prohibitive even for families earning $50,000 a year. This is no longer just a low-income issue -- it has become a middle-class issue, he said.

Republicans are expected to try to improve access for low-income workers and families through health insurance tax credits or other subsidies.

They also are expected to push for legislation to deregulate association health plans so that established organizations can set up group-style health insurance plans that cross state lines. According to its proponents, this approach would let small businesses band together to generate the same buying power large employers get when purchasing coverage.

But many Democrats are concerned that removing states' control over such plans would increase the number of fraudulent insurance products on the market.

Democrats also have taken up the call of tax credits, but they are expected to still push for Medicaid and State Children's Health Insurance Program expansions to cover Americans who are falling through the current system's cracks. These populations include poor, childless adults; people who have lost employer-based coverage; and young adults no longer covered by their parents' insurance.

No matter the strategy, the federal government would need to allocate new funds. Congress authorized $50 billion to deal with the problem in fiscal year 2004, but the money was never allocated. "It's inexcusable that we leave that money sitting on the table while increasing numbers of people are uninsured," said Ron Pollack, executive director of the consumer group Families USA.

Medicaid reform: Up next

With the Medicare drug benefit largely out of the way, Congress is expected to take renewed interest in Medicaid, which has been hit hard in recent years by the economic downturn.

In general, Democrats are likely to defend the program as an integral part of the country's health care safety net, while Republicans are concerned about the seemingly unstoppable growth in Medicaid spending.

Democrats would like to put more money into the program, not only to help states struggling with shortfalls, but to cover more low-income Americans without insurance.

"Limited eligibility for parents and restrictions on coverage for childless adults leave over 20 million low-income adults uninsured and outside Medicaid's reach," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured. In 43 states, childless adults don't qualify for Medicaid even if they are virtually penniless.

Experts agree that even if it is not expanded, the program will need more money to remain viable. Medicaid rolls grow when the economy falters, meaning the federal government needs to increase its contribution in lean times to make up for drops in employment and state tax revenue. Otherwise, Medicaid is doomed to a cycle of growth during boom times and deep cuts during bad times.

Democrats strongly oppose Republican efforts to switch Medicaid to a block grant or other funding system that would cap federal matching funds.

A preliminary block-grant proposal floated by the Bush administration last year met with stiff resistance. Since then lawmakers from either party have offered few specific Medicaid reform proposals.

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Tackled in 2003

Medicare reform: Congress' biggest health care action last year was passage of this massive law, which creates an outpatient prescription drug benefit, boosts physician pay and provides regulatory relief.

Pediatric drug rule: Lawmakers gave the Food and Drug Administration the power to require pharmaceutical companies to test medications for use in children. Pediatricians say hard data will eliminate guesswork when they prescribe medication to children. But some doctors object to drug testing on minors.

"Partial-birth abortion": Congress once again passed a prohibition on intact dilatation and extraction, but this time it was signed into law by the president. The ban has been halted by pending legal action in several U.S. district courts.

Medicaid relief: States struggling with budget shortfalls got some help with a $20 billion infusion from Congress that temporarily raised the federal Medicaid matching contribution.

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Tasks for 2004

Mental health parity: Congress extended the current parity law another year but has yet to act on legislation that proponents argue would close large loopholes that allow insurers to charge different co-pays and limit treatment sessions.

Patient safety: Legislation to allow doctors and others to report medical errors without fear of reprisal or litigation made progress but still awaits a Senate vote.

Reimportation: A bipartisan group of lawmakers will push again for passage of legislation to allow purchase of cheaper prescription drugs from outside the United States. Previous laws were not implemented because of stipulations that the federal government certify imports' safety. Such a condition is expected to undermine reimportation provisions in the new Medicare law.

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