Lawmakers, Physicians Respond to Bush Adminstration’s Stance on Medicare Provider Payments

The letter sent last week by HHS Secretary Tommy Thompson and White House Office of Management and Budget Director Mitch Daniels to Reps. Bill Thomas (R-Calif.) and Nancy Johnson (R-Conn.) in response to their concerns about reductions in Medicare physician reimbursement rates has received a number of "very different reactions" from lawmakers and health provider groups, CongressDaily reports (Rovner, CongressDaily, 3/20). Medicare reduced physician reimbursement rates by 5.4% on Jan. 1 under a formula approved by Congress in 1997. The Bush administration has said that lawmakers, who have raised concerns about the reduction, must offset any increases in Medicare physician reimbursements with reductions for other providers in the program. Thomas and Johnson criticized the policy in a letter to Thompson and Daniels in February (Kaiser Daily Health Policy Report, 2/14). In their letter, Thompson and Daniels said the Bush administration has "no compelling evidence that there is a problem with the overall adequacy of provider payments." They added, however, that the administration would support proposals that "lessen volatility" in Medicare physician reimbursements. The letter also said that "savings from ... measured changes in hospital payment updates could be more than adequate to finance reasonable net increases in total payments to physicians." Thomas "welcomed" the letter, saying, "The administration's response regarding provider payments offers useful guidance as we begin the process of modernizing and strengthening the Medicare program."

Criticism
However, the administration's response was met with criticism from some lawmakers, including Johnson, and provider groups. "I was not pleased with it. I did not feel it was a giant step forward," Johnson said. She said that she had hoped Thompson and Daniels would send "the kind of laundry list administrations in the past have come up with" to allow lawmakers to "pick and choose" areas where they could make reductions to offset an increase in Medicare physician reimbursements. However, Johnson said that she has had "some useful conversations" with administration officials after she received the letter and that "there is common ground to be found." Sen. Ron Wyden (D-Ore.) said, "I think it's both a substantive and political mistake for the administration to be setting up this war among providers," adding, "I think on a bipartisan basis the Senate's going to reject it." Provider groups also weighed in on the policy. American Hospital Association Executive Vice President Rick Pollack said, "At a time when the pressures on hospitals are already reaching a crisis point -- increased health needs of seniors, more uninsured patients at our doors, a shortage of health care workers and hospitals' pivotal role in disaster readiness -- now is not the time for government to strike another blow at health care's foundation." American Medical Association Secretary-Treasurer Donald Palmisano added, "The administration needs to strongly reconsider a number of assumptions and policy positions" (CongressDaily, 3/20). An American Medical Association ad on the provider payment reduction is available online through AdWatch.