Complicated Formula, MASA Outlines Medicare Reimbursement

The Medical Association of the State of Alabama (MASA) is working with its national counterpart, the AMA, on the issue of Medicare reimbursement and federal torte reform. Medicare reimbursement is a complex process in which Medicare uses a complicated formula to determine whether or not physicians receive an annual increase. According to Mark Jackson, MASA's legislative affairs director, physicians haven't received increases in reimbursements in several years, with some years actually bringing cuts, while other medical costs are inflated and health entities such as hospitals and nursing homes receive increases. Pharmaceutical companies have also been recipients of payment increases. "Due to our antiquated formula, physicians have been on the receiving end of decreases," Jackson said. "Essentially the approach Congress has taken has been one of freezing payments, which is better than cuts, but it doesn't solve the problem. So we're working to try to get that formula corrected." The problem boils down to money in large amounts. Even a 1 percent increase in reimbursements results in a multimillion-dollar price tag. Factoring in the cost of the war in Iraq and swelling budget deficits, leveling the playing field will require a major overhaul of the reimbursement process. Unfortunately, there could be further gridlock if the executive branch and Congress don't agree on reforms. MASA and AMA are also working together to secure passage of federal torte reform in congress. Jackson said the AMA wants to accomplish on the federal level what has been done at the state level in Alabama, which is to establish some caps on damage awards "so that the sky is not the limit." Alabama passed an awards cap of $450,000 in the late 1980s. Legislation providing for limitations of the dollar amount of awards has passed the House of Representatives on five or six different occasions, Jackson said, but it always gets hung up in the Senate. A majority of senators would vote in favor of caps but procedurally a super majority is needed to prevent a filibuster. "Historically, we've been three or four votes shy of that," Jackson said. Federal caps on damage awards would, of course, impact the cost of malpractice insurance throughout the country. "Limiting awards would provide insurance companies with a certain amount of liability predictability," Jackson said. Caps would eliminate extreme awards in the millions of dollars and insurers would be able to reasonably predict their losses, which would help keep rates stable. Jackson said both Medicare reimbursement and torte reform are uphill battles, but he's cautiously optimistic. December 2006