System overhaul: AAD urges lawmakers not to follow Medicare model

August 1, 2009

With comprehensive healthcare reform moving through Congress, the American Academy of Dermatology (AAD) is urging lawmakers not to use Medicare as a model for any public health insurance option that may be included in the final plan.

Key Points

"A major impetus for the overhaul of our nation's healthcare system is the very fact that the Medicare system is crumbling and threatens to implode in the near future," says David M. Pariser, M.D., AAD president.

To model a public option feature after Medicare, or to approve a "Medicare-like plan," would be a major mistake, Dr. Pariser wrote in a June letter to Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee.

'Negative impact'

What's more, the proposal would not permanently repeal the sustainable growth rate (SGR) formula and end its "negative impact" on payment rates.

"The short-term 'fixes' over the past decade have failed to keep up with the real costs of providing patient care, and physicians are still faced with 40 percent in cuts over the next decade," Dr. Pariser says.

Furthermore, "As the country transitions to a system that is transparent, patient-centric and more efficient, Medicare continues to apply an increasing number of mandates and administrative burdens to physicians, dramatically increasing practice costs and making it more difficult to realize any efficiencies," Dr. Pariser says.

As 44 percent of AAD's membership is composed of solo practitioners, such barriers become even more "formidable," he says. In fact, Dr. Pariser says, any Medicare-like public option plan "would drive dermatologists from the Medicare program and ultimately reduce patients' access to high-quality dermatologic care."

The AAD agrees with the objective of providing health coverage for more Americans, especially those with lower incomes, "but we fear those efforts will be in vain if we do not appropriately address and strengthen the underpinnings of the Medicare system, including physician reimbursement," Dr. Pariser says.

Offsetting costs

In its report to Congress in June, the Medicare Payment Advisory Commission (MedPAC) said a 21.5 percent reduction in overall Medicare fees would be required to offset Congressional overrides of scheduled cuts for 2007, 2008 and 2009 under the SGR formula.

Legislation approved by the House of Representatives and proposed by President Obama would offset those cuts to allow the establishment of a new system for determining fee levels. However, the mounting federal debt caused by the economic stimulus initiative has raised concerns in the Senate. While it is expected that Congress won't permit a 21.5 percent reduction, an important question is whether healthcare reform legislation will deal with that issue permanently or simply delay it once again.

Dr. Pariser says that many physicians do not participate in the Medicaid program "because its historically low payment rates do not begin to cover the costs of providing care." The AAD believes that for Medicaid to provide low-income beneficiaries with adequate care, reimbursement rates must be equal to Medicare.

The AAD "strongly supports" a proposal that would help assess health status indicators of chronic diseases by developing a personalized prevention plan for all enrolled beneficiaries once every five years, Dr. Pariser says. National medical organizations should be consulted in this process, he adds, as new preventive services are added and others are withdrawn from the list.

For example, he says, America "is facing a skin cancer epidemic with over 1 million new cases of skin cancer diagnosed ... every year, more than all other cancers combined."

Dermatologists can cure skin cancer and prevent its spread (in most cases) if it is detected in time, he says, so skin cancer screenings should be incorporated into the standard preventive care regimen.

Medical education

According to Dr. Pariser's letter, the AAD thinks Congress should also provide sufficient support for medical education.

"The sharply rising incidence of skin cancer is adding to the urgency of providing access to dermatologic care," he says, noting that the supply of dermatologists is inadequate to meet current or future demand.

"Reductions in medical education payments could put significant strain on residency programs as hospitals seek changes to recover their unreimbursed costs," Dr. Pariser says.

"We believe that great care must be taken to ensure that the physician workforce shortage is not further exacerbated," Dr. Pariser adds.

Bob Gatty, former congressional aide, covers Washington for businesses specializing in healthcare and related issues. Contact him at bob@gattyedits.com