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Includes funds to reduce BBA impact
The Clinton administration plan to revise Medicare is gaining considerable attention for its proposal to offer prescription drugs to beneficiaries, but it contains a number of provisions that affect physicians. These include:
• Balanced Budget Act of 1997 provisions. On the plus side, the proposal sets aside $7.5 billion to restore some of the payment reductions affecting providers included in the Balanced Budget Act (BBA) of 1997.
"On the negative side, the measure extends other cost savings provisions of the BBA that were going to expire after 2000, saving a net of $31.5 billion over 10 years," notes an analysis of the proposal by the Medical Group Management Association.
• Competitive pricing. The plan provides new and broader authority for competitive pricing, incentives for beneficiaries to seek care by physicians who provide high-quality care at reasonable costs, and "other best-practice private sector purchasing."
• Competitive defined benefit. Proposed reforms in the Medicare managed care program would require plans to offer a "competitive defined benefit" covering Medicare’s current benefit package, plus a new prescription drug benefit.
The administration claims this will permit beneficiaries to compare plans "apples to apples." Plus, by letting beneficiaries keep 75% of the savings for plans that offer the core benefits at less than the average cost, the proposal encourages beneficiaries to select lower-cost plans. Beneficiaries selecting higher-than-average-cost plans would have to pay the full difference of the amount exceeding the average.
Plans, however, could continue to offer additional benefits, including vision and hearing care, if offered as a separate supplemental package.
• Preventive care copayments. Copays and deductibles for preventive medical care, such as mammograms, prostate cancer screenings, and diabetes management, would be eliminated. "It makes no sense for Medicare to put up roadblocks to these screenings and then turn around and pick up the hospital bills that screenings might have avoided,’’ President Clinton said.
• Medical laboratory tests. Patients would have to pay 20% of the costs of clinical laboratory services.
• Teaching hospital disproportionate share payments. Carves out from current managed care fees Medicare payments to hospitals that serve a disproportionate share (DSH) of low-income and uninsured patients and prevents further cuts to DSH hospitals in the future.
Given the support among seniors for the President’s proposed prescription drug coverage, the question in Congress is not whether the new Medicare benefit should be approved, but how and by how much.
Benefit would begin in 2002
President Clinton says his proposed $1,000-a-year prescription drug benefit for older and disabled Americans — at the cost of a monthly $24 premium — "is a benefit our seniors can afford at a price America can afford."
If approved as presented, the new drug benefit would be available as an option for those 65 and older and for the disabled beginning in the year 2002. It would cost the government $118 billion over 10 years, administration officials estimate.
Coverage would start with the first dollar of prescription costs, with no deductible. The government would pay half of the first $2,000 of drug costs in a year. Any drug costs above $2,000 in any given year would have to be paid entirely by the beneficiary.
The monthly premium would rise gradually to $44, and the $2,000 cap would rise to $5,000 by 2008. In that year, a beneficiary would pay $528 to have the government pay for up to $2,500 worth of drugs. Part of that premium increase would account for inflation, say White House officials.
Medicare recipients already pay a $45.50 monthly premium to cover doctor’s office visits.
Beneficiaries who have annual incomes below $11,000 per individual or $17,000 per couple would pay no premium or cost-sharing for drug coverage up to the annual caps. Other low-income Medicare recipients would get help paying the premium.
About two-thirds of seniors 65 and older already have some drug coverage from benefits offered by former employers, private insurance policies they purchase on their own, or Medicare HMOs.
The administration maintains that the proposed outpatient drug discount would not be obtained through price controls. Instead, reduced prices would be achieved because drugs for the program would be purchased through pharmacy benefit management programs and HCFA’s "bargaining power," says White House national economic advisor Gene Sperling.
The American Association of Retired Persons supports the concept of a new Medicare prescription drug benefit, but is worried about how much Medicare clients will be asked to pay out of pocket.
Meanwhile, drug makers are concerned about how the government will decide which drugs to cover at what prices. Other health care provi ders, including hospitals and HMOs, worry that Medi care money to pay for drugs will be squeezed from their own budgets even as they struggle to adjust to payment cuts Congress approved two years ago to help balance the federal budget.