One Wrong Turn That Can Be Fixed : Federal agency should revise Medicare fee plan

Two years ago Washington took action to smooth out a pattern of physician fees for Medicare patients that, for 25 years, had bounced up and down. But that much-needed effort has gone so badly awry that it may require treatment at the White House.

The need for repair of the Medicare system in general goes well beyond revising fees as a step toward controlling health costs. Reforming our woefully lacking health care system is a grueling challenge at best. But until doctors, patients and insurers--including the federal government--can agree on what is fair payment, deep reform may be impossible.

The reform action that Congress agreed on in 1989 involves a fee schedule, dug out by statisticians over many years, that is intended to reflect the real value of the skill, time and costs that go into treating a patient. Under the legislation, fees are to be adjusted starting in 1992 to allow for regional differences, and treatments ranging from office visits to organ transplants will be covered.

Doctors often spend more time with patients in their offices than Medicare will pay for. Yet these very visits often lead to inexpensive remedies that nip serious health problems in the bud before they become life-threatening and costly emergencies. By the same token, some surgical procedures require a smaller investment by a physician than is justified by a hefty bill. Thus the scheme Congress came up with involved shifting some of the funds now spent on surgery to family doctors and others who are the first to see a patient. That meant less money for the costlier medical procedures.

An unintended but absolutely beneficial side effect of the reform would be to tilt Medicare in the direction of preventive medicine. Many government officials and doctors think the tilt eventually would be reflected throughout the health care system as health insurance companies and other private payers fell in line with the new Medicare fee schedule.

Congress ordered the fees into effect in 1992 for 34 million elderly or disabled Americans covered by Medicare. The federal Health Care Financing Administration (HCFA) was asked to fill in the details.

Some doctors’ bills were to go up as part of the reform, while others were to go down. Congress stipulated that total spending would be a wash--with no more or less spent under the new schedule than under the old.

Somehow--and nobody seems to know for certain how--the budget shrank. The amount of money earmarked for Medicare under HCFA’s interpretation of the law between 1992 and 1996 will be nearly $7 billion less than with no change in the fee schedule.

Physician groups are up in arms, maintaining that nearly all doctors will get less per patient than they do now. Both Republicans and Democrats in Congress are demanding that HCFA get its numbers straight, and even an independent group of economists and health-care specialists that advises the government on doctors’ fees agrees that the agency got it wrong.

The Physician Payment Review Commission adds that the shift from what Congress intended is so sharp that it could threaten the ability of Medicare patients to get treatment.

The threatened loss of $7 billion could just be the result of a mistake. HCFA may have been trying to guard against doctors taking on more patients to make up for income losses under the new fee schedule. Conspiracy theorists suspect it is another case of the Office of Management and Budget trying to cut the budget behind the scenes.

Either way, this Medicare fee problem is relatively easy to cure; HCFA can and should take another look at a fee schedule that pleases no one. It should not take a presidential call to straighten it out. But if someone in the Administration doesn’t move, Congress should.