AMA meeting: AMA backs Medicare pay reform plan

Chicago -- The AMA House of Delegates threw its support behind organized medicine's plan to push for at least two years of positive Medicare updates while it continues to work on more permanent reforms.

Delegates at the Annual Meeting backed a report from the AMA Board of Trustees that lays out the strategy, unveiled earlier this year by the AMA and 76 other medical organizations. Under the plan, Congress would eliminate the physician pay cuts expected in 2008 and 2009 but also would establish a "date certain" by which to overhaul the entire payment system.

Support from the house for this approach will allow the Association to maintain its focus while it and the other organizations navigate through a couple of politically tricky years, said AMA Trustee J. James Rohack, MD. "This reflects the reality that in our current legislative cycle, the Congress isn't ready yet to bite the apple," he said. "We feel that in asking for the two years, this gets us through the 2008 presidential elections."

The desired result is a permanent pay system that bases annual changes in physician rates on the Medicare Economic Index, a measure of the increases in doctors' costs of providing care. The two years of immediate relief also would be based on the MEI.

Some delegates warned, however, that simply moving from the sustainable growth rate formula to one based on the MEI would be a good first step but not the solution to all of physicians' Medicare payment problems.

"We thought the SGR was good at one time, and the MEI could also come back to bite us in the future," said Marcy Zwelling, MD, an internist and delegate from Los Alamitos, Calif.

Instead of simply exchanging one problem-prone formula with another, Medicare should be transformed into a program of defined contributions, rather than defined benefits, Dr. Zwelling said. Under such a concept, which the AMA supports, Medicare would pay a set amount for a beneficiary's care and give him or her the choice of how to spend that money.

A more specific proposal for Medicare defined contribution plans was included in a separate Council on Medical Service report, which explored several strategies to strengthen Medicare that go beyond the physician payment issue. Delegates approved the proposal, which would transition the system to one that requires beneficiaries to pay the difference between the premiums for the benefits they select and what the government offers as its set share.

The house also approved recommendations in the report to implement a single cost-sharing structure for beneficiaries and restructure Medicare's age-eligibility requirements. Such bold reforms would be necessary to ensure that Medicare survives the increasing strain on its finances, while maintaining many of its core features, the council said.

The house referred for further review two recommendations that would have called for combining Medicare's hospital and doctor trust funds and phasing in a high annual deductible for all Medicare services.

The aim in combining the Medicare Part A and Part B trust funds is to make the program more efficient by better targeting funding depending on medical needs. For example, if more spending were needed for physician services, and that translated into less demand for hospital care, funds could be allocated accordingly.

But this move might prove difficult, because the physician side of the program is voluntary, while the hospital side is mandatory for anyone who signs up for Medicare, said Richard W. Whitten, MD, an internist and delegate from Kent, Wash.

The concept of a high annual deductible aims to encourage beneficiaries to use Medicare services only when they truly need them. But some physicians, such as Larry S. Fields, MD, a family physician and delegate from Flatwoods, Ky., worried that this could create a barrier to needed care.

"The high deductible causes you a problem with people not seeking care until it's too late," he said.

The AMA Board of Trustees will report back on these two issues at the Interim Meeting in November.