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Nothing They Don't Know - Medicare Report Shows Urgency of Situation

April 14, 2008
Article published March 31, 2008 Nothing they don’t know Medicare report shows urgency of situation By: Matthew DoBias Hospital executives and practicing physicians said that the government’s annual “doom and gloom” Medicare trustees’ report released last week serves as proof of what they see every day: The federally funded program is on shaky legs. Moreover, they say that it appears that the government is unwilling or unable to do anything to put Medicare on solid footing, putting at risk hospitals’ and doctors’ ability to provide care, and oftentimes forcing them to get the message out to the community at large. “This is not Chicken Little stuff,” said Richard Morrison, corporate vice president for government affairs at 28-hospital Adventist Health System, based in Winter Park, Fla. Morrison said that he frequently uses data from the report to jump-start presentations with hospital financial officers about the state of Medicare and what to do about it. “I don’t think people use these reports as much as they should,” Morrison said. “To me, these reports are the ultimate in reality orientation. You can cut to the bottom line real quick: Medicare Part A is going broke.” And it’s doing so at a breakneck pace, according to government officials, who last week in Washington released the 236-page report showing that this would be the year that Medicare begins to spend more money than it takes in from taxes and other revenue sources. Ultimately, by 2019, even the program’s go-to sources for funding will have been spent. In the meantime, Medicare will continue to tap dollars tied up in Treasury bonds and other government funds to stay solvent. But HHS Secretary Mike Leavitt said at a news conference that doing so is just a stopgap measure, adding that more meaningful reforms are needed. Leavitt said that a good start would be for Congress to enact the White House’s proposed budget, which includes $200 billion in Medicare and Medicaid cuts over five years, adding that administration officials said it would extend Medicare’s solvency for an additional 10 years. Bush’s proposal includes cuts to graduate medical education payments—contributing to fears in academic circles that medical centers will take a hit in reimbursement from Medicare and Medicaid one way or another (See story, p. 12). Bush’s plan, however, has been all but scuttled, with members of Congress shunning the president’s budget. “Dire warnings have become a seasonal occurrence,” Leavitt said, adding that most Americans have “become numb” to such proclamations. While the message is not new—the trustees essentially said the same thing in their 2007 report—the rising angst that surrounds it is. “Our nation has known this day has been coming for years,” said James Nathan, president and chief executive officer of four-hospital Lee Memorial Health System in Fort Myers, Fla., who said that political wrangling has led to more talk about the situation, but less action. Medicare accounts for 48% of Lee Memorial’s patient mix, and a little more than 30% of its revenue, Nathan said. The system is one of the largest not-for-profits in Florida, far surpassing state and national averages in terms of the number of elderly patients it admits. In many regards, Lee Memorial’s situation today is where the nation’s hospitals see themselves heading over the next several years, especially as the first wave of baby boomers become Medicare-eligible and as patients come in sicker. “But the public policy issues are way behind the economic pressures we’re feeling here,” Nathan said. “We obviously have an obligation to use messages like this to provide education to those in our community,” Nathan said, but added that without real political leadership, little is likely to change. Other providers share similar worries. “It has physicians concerned,” said James King, a family physician in a group practice in Selmer, Tenn., and president of the American Academy of Family Physicians. The trustees’ “projections are based on if they don’t do anything, which pretty much tells everyone that they should be doing something. But they’re not.” On average, family physicians typically can have anywhere from 20% to 40% of patients on Medicare, he said. That’s troubling, considering that Medicare payments often don’t meet the actual cost of care, King said. Since private insurers usually base their payments on Medicare’s fee schedule, “however Medicare goes is pretty much how the entire profession goes,” he said. A side effect is that older doctors are looking to get out of practice earlier than they once were—or dropping Medicare patients altogether—while younger doctors are choosing better paying specialties, King said (Feb. 25, p. 24). Jeffrey Selberg, president and CEO of two-hospital Exempla Healthcare in Denver and an American Hospital Association board member, said that a mix of reforms are needed. Selberg, like others, said that payment policies have to be changed in order to reflect the changing population demographics. But, he said, reforms also need to come from the provider side as well, especially in the treatment of chronic illness.What do you think? Write us with your comments. Via e-mail, it’s mhletters@crain.com; by fax, 312-280-3183.