AAOS Now

Published 4/1/2009
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Peter Pollack

Reimbursement formula has “outlived its usefulness”

Call for change requires greater physician involvement

In an affable and fast-paced conversation, former Secretary of Health and Human Services Tommy G. Thompson and former Senator William W. Bradley discussed a wide variety of political topics during the 2009 Annual Meeting educational event sponsored by the Orthopaedic Political Action Committee (PAC). Moderated by Stuart L. Weinstein, MD, the point counterpoint between the two political figures—one Republican and one Democrat—ranged from healthcare reform to Medicare and medical liability.

Will a nonpartisan panel work?
Dr. Weinstein initiated the discussion by asking if a nonpartisan blue ribbon panel, similar to the one created to determine which military bases should be closed, should address the issue of healthcare reform. Both Sec. Thompson and Sen. Bradley stated that such a move may have made sense in base closings, but argued that the healthcare issue is so large and important that it is better addressed directly by the U.S. Congress.

“The problems of democracy aren’t solved by less democracy,” said Sen. Bradley. “Who will we as a people entrust one sixth of our economy to? Ultimately, healthcare reform has got to be done by the elected representatives and a leader who can break [through] the special interests because he’s able to project the general interest and mobilize people. It’s not only health care at issue, but the long-term economic health of the country.”

“The overall transformation of health care has got to be done by Congress,” agreed Sec. Thompson. “Congress is not going to delegate that responsibility to anybody and I don’t think they should. We have to have a complete review of health care in America. It’s too expensive, too bureaucratic, and not equitable for large segments of our population, including the doctors.”

Regarding Medicare, however, Sec. Thompson thought such a panel might be a good step in reforming the program, as chang­ing Medicare could prove to be a hot-button issue from which most Congressional representatives would prefer to keep their distance.

“Medicare is so huge… It’s about a $65 trillion unfunded liability. The only way to fix Medicare is to raise taxes, to restrict benefits, to raise the eligibility age, and to do something about the end of life, because 50 percent of Medicare benefits are paid in the last 6 months to 12 months of a person’s life.

“Is a Democrat or a Republican in the legislature or Congress willing to do that?” he asked. “No. So to fix Medicare, I believe we may have to go to some type of base-closing commission.”

An “honest” billing
Both speakers also agreed that the current Medicare sustainable growth rate reimbursement formula had outlived any usefulness it may once have had. Further, the system now in place has become inefficient and untenable for all concerned parties.

“When I was in the Senate,” said Sen. Bradley, “I was asked to vote on reimbursement rates every so often. I am totally unqualified to set physician reimbursement rates. I think that this is only going to be dealt with in the context of a large healthcare reform package. Take the reimbursement structure and wipe it away, and let’s start again with something that makes greater sense.

“Congress has continued to avoid making the decision of either scrapping [the Medicare formula] or revising it,” said Sec. Thompson. “Instead, Congress just keeps postponing the decision and it keeps getting worse each year. This year, I think the formula called for an 8.5 percent to 10 percent cut, and next year, in 2010, it could be a 20 percent cut.”

“The point is that any healthcare reform has got to get to an honest billing process,” Sen. Bradley continued. “Hospitals charge four times more than their real cost because insurance companies are going to hammer them down. Doctors spend $30 billion to $50 billion a year trying to get paid. Insurance companies spend $30 billion to $50 billion a year trying not to pay. It is a dysfunctional system.”

Resounding applause showed that the audience agreed with Sen. Bradley’s assessment.

Both Sec. Thompson and Sen. Bradley agreed that a culture of personal responsibility must be an adjunct to healthcare reform.

Sec. Thompson pointed out that tobacco, diabetes, and obesity are among the biggest issues facing the healthcare system today—all issues that fall, to greater or lesser degree, under the control of the patient.

“Everybody knows that [personal responsibility] is important,” said Sec. Thompson. “Treating chronic illness accounts for 75 percent of the cost of health care; 135 million Americans have one or more chronic illnesses.

If you’re going to change health care, you’ve got to look at chronic illnesses and wellness and prevention.

“Our political system is at war between two competing ethics,” said Sen. Bradley. “Democrats follow the ethic of caring and collective action; Republicans have the ethic of responsibility and individual action. But the truth is, we need both—especially in health care in America today.”

No quick tort reform
Neither speaker predicted major changes in the near term in the area of tort reform, but both agreed that the medical community needs to be more involved if progress is to be made.

“I think you have to come at [medical liability] from the angle of errors in hospitals,” said Sen. Bradley. “Every day, the number of people who die in hospitals because of medical errors is the equivalent of a 747 aircraft crashing. Why are there so many medical errors? Because there is no systematic way to detect whether a nurse is making the same mistake over and over, or whether a doctor made the mistake.”

He offered two possible alternatives for solving the problem: creating a medical court with an expert judge who would review cases to determine if they should proceed, or establishing a “safe harbor” time frame that would allow medical professionals to report an error in the first 48 hours without fear of a lawsuit. Instituting such a safe harbor would allow data to be generated that could be used to reduce the incidence of errors.

Sec. Thompson explained that physicians will never see medical liability reform until they can match the influence of trial lawyers over legislators. Physicians, he said, are known for showing up in Washington, D.C., one day a year, whereas trial lawyers devote large amounts of time, money, and effort attempting to swing legislative votes.

“I agree with some kind of a medical court,” he said. “I agree with arbitration. But the only way you’re going to change the liability laws in America is to become politically connected and politically involved.”

Peter Pollack is a staff writer for AAOS Now. He can be reached at ppollack@aaos.org