AAOS Now

Published 8/1/2011
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John T. Gill, MD; Madeleine Lovette

Is Congress finally listening?

Ryan plan reflects many positions held by AAOS

It’s no secret that the current Medicare program is on an unsustainable path and that reform is necessary to ensure patient access to medical care. The American Association of Orthopaedic Surgeons (AAOS) believes that policy makers must undertake a careful review of the program’s components, including healthcare delivery and benefits, payments to providers, and initiatives to contain costs.

Earlier this year, the U.S. House of Representatives passed the Fiscal Year 2012 Budget Resolution, also known as the Ryan plan. This budget contains the most significant changes to Medicare since its inception in 1966. It also incorporates several AAOS positions, as reflected in the AAOS Position Statement on the Principles of Medicare Reform, as this analysis shows.

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.

Under the Ryan plan, current Medicare recipients and individuals age 55 and older in 2011 would remain in the traditional Medicare program. They would also have the option of shifting to the new plan. Starting in 2022, the Ryan plan would provide Medicare beneficiaries with a Medicare premium-support payment, which they could use to choose a healthcare plan from a variety of private options, similar to the way the Federal Employee Health Benefits Program operates.

Pre-existing condition clauses would be eliminated and the Medicare premium support payment would be adjusted so that wealthier beneficiaries would receive a lower subsidy; sicker beneficiaries would receive a higher payment, and lower-income seniors would receive additional assistance to cover out-of-pocket costs.

Qualifying age
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.

Under the Ryan plan, the age of eligibility for Medicare would increase by 2 months per year, starting in 2022, until it reaches age 67 in 2033.

Medical savings accounts
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 MSA seamless for those enrolling in Medicare who have an HSA.

The Ryan proposal supports the continuation of medical savings accounts and states that people with sufficiently low income would receive an additional federal contribution to deposit in a medical savings account that would help them pay for premiums and out-of-pocket costs.

Fixing the SGR
The AAOS believes that a flawed sustainable growth rate (SGR) Medicare reimbursement formula, if allowed to continue, will result in significant access and quality problems as providers struggle to deliver care below their actual costs.

The Ryan plan calls for a fix to the Medicare physician payment formula in the next 10 years so that Medicare beneficiaries continue to have access to health care. It provides for a reimbursement system that fairly compensates physicians who treat Medicare beneficiaries while providing incentives to improve quality and efficiency.

Tort reform
The AAOS believes that a uniform system to ensure 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 payer for services.

The Ryan plan seeks to ensure that the cost of frivolous litigation is not passed on to consumers in the form of higher healthcare premiums by capping noneconomic damages in medical liability lawsuits.

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

The Ryan plan would eliminate traditional Medicare fraud by transferring the responsibility for benefits and claims to private insurers.

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.

On April 6, 2011, a spokesman for the House Budget Committee said that the Ryan plan allocates $10 billion to preserve the Medicare Advantage program for seniors. There is conflicting information about whether Medicare Advantage is indeed in the Ryan plan and, if so, whether any changes are being made to it.

Additional issues
Quality initiatives, individual contracting, and graduate medical education funding are important issues outlined in the AAOS position statement that are not addressed in the Ryan plan. As budget details are worked out, however, these issues could be addressed.

The Ryan plan is, in part, a result of the AAOS’s persistent advocacy efforts on Capitol Hill. It is consistent with the AAOS principles that the Medicare program should move toward privatization, engender more individual responsibility and cost sharing by beneficiaries, have a higher eligibility age, and correct the flawed SGR physician payment formula.

Although some issues are not mentioned, continued advocacy will engender awareness of orthopaedic interests such as increased funding for graduate medical education. All in all, the Ryan plan may be a good start to reforming the Medicare program and is evidence that the AAOS is being heard in Washington.

John T. Gill, MD, is chair of the AAOS Advocacy Resource Committee; Madeleine Lovette is the communications specialist in the AAOS office of government relations.

“Path to Prosperity,” the 2012 Fiscal Year Budget Resolution (PDF)