Published 2/1/2009
Mary Ann Porucznik; Lindsay Law

AAOS outlines principles of Medicare reform

At its December meeting, the Board of Directors of the American Association of Orthopaedic Surgeons (AAOS) approved a position statement detailing its position on the fundamentals of Medicare reform. The statement was developed by the Council on Advocacy, under the leadership of David A. Halsey, MD.

The statement will serve as a guideline in working with the 111th Congress on healthcare reform and other issues. The full position statement is available online on the AAOS Web site. Readers are encouraged to consider the information presented and reach their own conclusions.

The position statement makes the following points:

Need for fundamental reform
The AAOS believes that the Medicare program needs fundamental reform because of the impending financial crisis that threatens patient access to medical care. To achieve Medicare solvency, the AAOS believes that policy makers must undertake a thorough review of all program components, including healthcare delivery and benefits, payments to providers, and initiatives to contain costs.

Medicare managed care
The AAOS believes that managed care plans offered within the Medicare program should have effective patient protection measures to ensure that quality and access are not jeopardized. Payments to Medicare Advantage plans should more closely reflect the costs paid in traditional Medicare fee-for-service plans.

Quality initiatives
The AAOS believes it is important that orthopaedic surgeons have direct input into the development of quality standards. The AAOS supports quality initiatives that demonstrate effectiveness in improving patient outcomes. It is important that quality and reporting initiatives are regularly re-evaluated to ensure that they continue to improve the quality of orthopaedic care. In addition, the adoption of appropriate performance measures and continued progress in constructively improving quality of care requires meaningful public comment on quality measures that have been broadly vetted at the stakeholder level through a standard procedure, and this occurs through adoption of measures developed by the National Quality Forum and endorsed by an appropriate multi-stakeholder body.

Sustainable growth rate formula
The AAOS believes that further cuts in payments to physicians will threaten access to quality care. The AAOS believes a priority for Congress should be to enact a permanent fix to Medicare’s flawed sustainable growth rate (SGR) formula. They payment fix should meet the following guidelines.

  • fully paid for without borrowing from future Medicare payments.
  • sustainable long-term
  • more closely reflects the actual increased practice cost as measured by the Medicare Economic Index

The AAOS also believes that the short term savings gained by cutting physician and hospital reimbursement will not solve Medicare’s long-term financial crisis.

Balanced billing
The AAOS believes that in the absence of SGR reform, repeal of the ban on balanced billing will help providers close the gap between inadequate Medicare payments and the cost of providing services to seniors.

Privatizing Medicare
The AAOS believes that policy makers should give serious consideration to privatizing all or part of the Medicare program. In any such privatized plans, however, it is critical that patient protection standards be enacted to make certain that patients have access to quality care and that Medicare dollars are used for patient care.

The AAOS believes that policy makers should enable seniors to select a defined contribution option.

The AAOS strongly supports enabling seniors to choose a Medicare Medical Savings Account (MSA) and encourages policy makers to make the transition from Health Savings Accounts (HSAs) to MSAs seamless for those enrolling in Medicare who have an HSA.

Medicare enrollment
Given Medicare’s short-term and long-term insolvency, the AAOS is opposed to proposals that would expand eligibility for enrollment in Medicare. Rather, policy makers should consider incrementally raising the eligibility age for Medicare to be consistent with Social Security.

Medical liability reform
The AAOS believes that a uniform system to assure the equitable and efficient handling of medical liability disputes on the federal and state levels is the best solution, particularly in a program like Medicare where the federal government is the largest payor for services. (See the
AAOS Position Statement on Professional Liability: Federal Tort Reform)

Beneficiary cost-sharing
The AAOS believes that most beneficiaries should assume greater cost-sharing responsibility for the Medicare program, with protections for low-income beneficiaries, in order to preserve their access to quality care. Among the broad range of options that policy makers could consider for enhancing beneficiary cost-sharing are the following:

  • Indexing Part B premiums to gradually raise the overall beneficiary cost-share of Part B increases above 25 percent
  • Further reducing the subsidy for Medicare Part B premiums for high-income beneficiaries so that they assume a greater share of program costs
  • Increasing Part B deductibles and indexing them to better reflect the cost growth in the program
  • Replacing the complex set of cost-sharing arrangements with a single standardized coinsurance rate
  • Restructuring Part A financing, including a Part A premium
  • Establishing a co-payment for home health, clinical laboratory, pathology and skilled nursing facility services
  • Raising the eligibility age for Medicare beneficiaries to be consistent with the Social Security program
  • Eliminating the costs generated by the increased utilization of services due to Medigap first dollar coverage
  • Enacting liability reform that will not only lower the costs of liability insurance and generate savings by curbing the practice of defensive medicine, but also ensure that patients have access to the health care they need
  • Establishing a basic benefit package for every Medicare patient, the projected cost of which is within the budget and would be expected to cover all basic health care needs. Then allowing supplemental insurance by private companies to enhance an individual’s coverage if they choose.

Graduate medical education funding
The AAOS believes that a mechanism needs to be developed to ensure that all payors contribute equitably to graduate medical education funding. In addition, a mechanism should be developed to ensure that the number of residency positions funded through Medicare and other payors actually reflects the nation’s health care needs.

Fraud and abuse
The AAOS strongly supports and will continue to cooperate in efforts to eliminate fraud and abuse in the Medicare program. The AAOS will also continue its educational efforts to address this issue.

Mary Ann Porucznik is managing editor of AAOS Now. Lindsay Law is communications manager for the AAOS office of government relations.