AMA’s New Leader Ushers in Embrace of Landmark Medicare Policy Changes
For Dr. Ardis Hoven and other veteran policymakers within the American Medical Association (AMA), the nation’s largest medical organization’s move to support transitioning Medicare away from a defined-benefit to a defined-contribution system has been a long time coming.
Hoven, an internist and infectious disease specialist based in Lexington, KY, served countless hours over the last two decades on the AMA’s Council on Medical Service, debating how the physicians’ organization could best advise Congress and the White House to preserve Medicare, the federal health insurance program for seniors and the disabled. Meanwhile, doctors became increasingly unsure what they would be paid by Medicare from one year to the next.
In the late 1990s, Hoven and her colleagues on the council supported savings accounts that would be privately owned and funded by Medicare. It was around that time that a Republican Congress and President Clinton signed into law the Balanced Budget Act of 1997, which dramatically slowed Medicare spending. This savings account idea would be an early iteration of the defined contribution the AMA now supports.
“You reflect back, and this effort has really been about how to improve Medicare, stabilize it and make it viable for the long-term,” Hoven told The Medicare News Group in an interview.
Since the late 1990s, the Medicare program has become ever more unstable, with doctors leaving the program and the nation’s fiscal condition worsening with rising deficits.
“(The) AMA has been working on Medicare policy to improve the program about 25 years, on an off,” said Hoven, who was first elected to the AMA board of trustees in 2005, following many years as a member and chair of the AMA Council on Medical Service. That council was where AMA’s policy to move to a defined contribution began. “But from about 2003 to about 2007 or so, there was more and more talk about instability of the Medicare program and threats of insolvency, so we started to take another close look at it.”
The prefunded account idea of the late 1990s eventually was replaced in 2007 by an AMA policy that called for “offering beneficiaries a choice of plans for which the federal government would contribute a standard amount toward the purchase of traditional fee-for-service Medicare or another health insurance plan approved by Medicare.”
Over the last five years, the AMA’s Council on Medical Service has built on the ideas the AMA supported back in 2007.
The new principles, approved earlier this month at the AMA’s mid-year House of Delegates policymaking meeting, replace what AMA insiders call the “tax-as-you-go-form of Medicare” that subjects doctors, hospitals and their patients to the whims of Congress and to funding mechanisms that make reimbursement payments unpredictable from year to year and is dependent on the nation’s fiscal condition.
The AMA has other pressing issues with Medicare funding, such as the Sustainable Growth Rate (SGR) formula, enacted as part of the Balanced Budget Act, which sets annual limits on how much Medicare can pay doctors. The SGR, though, is not the driving force in the organization’s push to strengthen Medicare through a defined-contribution option. The SGR does, however, lead to an annual lobbying push to avoid Medicare cuts to doctors, which has generally been more than 20 percent since 2010.
Hoven said the idea of defined contribution is part of the AMA’s broader view on the Medicare program. “I see this as the total Medicare issue and not just payment of doctors,” Hoven said.
The AMA wants patients to have accessibility, affordability and flexibility in their choice of health care, and the organization has long stood for that, Hoven said. “In fact, this concept would meet those expectations,” she added. “We’re looking to improve Medicare, stabilize it and make it viable for the long-term.”
In the Council on Medical Service’s deliberations on the new AMA policy principles, its 12 members saw the Federal Employees Health Benefit Program (FEHBP) as an example of a “defined contribution system that works very effectively for plan enrollees, while also effectively managing program spending growth.”
The FEHPB provides employees with a defined contribution that employees pay toward their health plans, which are approved by the federal Office of Personnel Management. The AMA Council on Medical Service reported that, “Participating insurers offer a wide range of plan types, including preferred provider and health maintenance organization options, point of service plans, high deductible plans, and consumer-directed plans that offer health savings accounts.” This report was presented by Dr. Donna Sweet to the AMA’s policymaking House of Delegates earlier this month. Sweet is the current chair of the AMA’s Council on Medical Service; she is an AMA member from the American College of Physicians and an internist, based in Wichita, Kan.
As Congress and the White House look in the coming weeks for new ideas to reduce the deficit and avoid the so-called fiscal cliff, Hoven sees promise. She believes the AMA’s newly approved set of policy principles for a Medicare defined contribution will receive serious consideration in Washington.
Hoven said the AMA doesn’t expect policymakers in Washington to adopt the AMAs policy in its entirety, but it is hoping for at least the creation of some pilot projects within the Medicare program to test and study whether a defined contribution approach would work in certain markets, before any possible national rollout.
“Congress needs to take a hard look at moving toward pilots or some way of evaluating this to see how it works,” Hoven said. “Something’s got to change. This is seemingly a viable way to make a good thing happen.”
Although Democrats that have bristled at such an approach strengthened their majority in the U.S. Senate, Obama was overwhelmingly re-elected, the AMA’s support of a defined-contribution approach is not to be underestimated. The AMA’s endorsement of the Affordable Care Act was critical and came at a key time in the weeks leading up to Congressional approval in 2010 of the sweeping health legislation.
“We have some very good opportunities ahead of us,” Hoven said. “We must be ready and be prepared and do what is necessary for the American people.”
Under the AMA’s set of policy principles, defined contribution amounts would be “set at the value of the government’s contribution under traditional Medicare.” Medicare beneficiaries with lower incomes or those who are considered sicker would receive larger contributions in what many see as a means-testing approach.
In addition, competing plans would be subject to regulations to ensure patient protections. Private plans would also have to provide “at least actuarial equivalent” coverage as that provided by traditional Medicare, the AMA policy says.
“If you speak to members of Congress in both parties, they all know that change is going to have to occur,” Hoven said. “Both parties recognize there are huge challenges in the Medicare program. The timing is right.”
--By Bruce Japsen/For The Medicare NewsGroup
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