The medicare program and thoracic surgery: challenges for the new century

The 1990s was a difficult and frustrating decade for thoracic surgeons. Physician payment reform for the Medicare program, which was first proposed in the 1980s, was legislated by Congress in 1989, and implemented in stages beginning in 1992. As a result of this process, thoracic surgeons have experienced substantial reductions in reimbursement for their professional services to Medicare patients. We previously reviewed the health policy and legislative history of Medicare physician payment reform [1]. In that paper, we described the resource-based methodology that has been developed and used for the determination of physician work levels and that has so adversely affected surgical specialists. More recently, many of our professional organizations have attempted to mitigate further reductions that are occurring now because of changes to the practice expense component of the Medicare fee schedule. Unfortunately, we can expect additional reductions due to the final phasing-in of the new Medicare professional fees. We were especially disappointed in November 1999, when the Health Care Financing Administration (HCFA) altered its practice expense guidelines and disallowed the costs incurred by specialists’ clinical staff, such as a physician assistant, when assisting the surgeon in the hospital. Anesthesiologists, gastroenterologists, cardiologists, and many other hospital-based specialists who use their own employed staff in hospitals also are being penalized by this policy. This decision adds substantially to the frustration of cardiothoracic surgeons who have experienced such demoralizing decline in support for their care of Medicare beneficiaries. I have been asked repeatedly over the past several years by many colleagues how much more reduction can be expected from Medicare physician payment reform. We are asked, especially after this most recent policy interpretation, whether HCFA intends to continue to reduce its support for hospital-based specialists. Is there a floor below which reimbursement rates cannot be driven? Perhaps the most difficult question to answer convincingly and one that is raised repeatedly is, “What can we do to stop this unfair treatment?” Everyone in medicine has had to deal with the consequences of declining support for physicians in the Medicare program, but there has been a disproportionate decline experienced by specialists. Some thoracic surgeons believe that the costs incurred while caring for some Medicare patients will exceed what is provided by the program. Many wonder whether we will be able to continue to treat many of the most difficult patients when to do so will result in financial losses. Furthermore, the Medicare program’s resource-based method for determining physician reimbursement is being adopted widely by commercial health insurers and concern for future economic survival deepens. We worry not only about whether we can afford to provide thoracic surgery care for patients in the future but we are also concerned about why anyone would aspire to become a thoracic surgeon under these evolving circumstances. Many believe that the length of training required, the personal demands of thoracic surgery practice, and the level of society’s expectations for perfect outcomes, combined now with severe reductions in physician support, will deter many bright young people who in the past have aspired in such numbers to this respected specialty. Even the optimists among us are shaken by what appears to be erosion of the respect and esteem of our fellow citizens that thoracic surgeons enjoyed in the past when our professional work was more appropriately valued. Why has this happened to our specialty? Is there anything that we can do about it in the future? Public policy and health economics experts have declared for 20 or more years that funding for the Medicare program has been growing exponentially and is out of control. Advancements in medical technology and the aging of the population with steady increases in the number of eligible Medicare recipients prompted planning for aggressive Medicare reform, especially in the 1980s when the U.S. government tightened its belt under the economic reforms of the Reagan administration. The prospective method for reimbursing hospitals, based on diagnostic-related groups (DRG) of medical conditions, was instituted in the late 1980s. Physician payment reform with cuts to the Medicare fee schedule in Part B of the program began in earnest in 1992. Although we are nearly finished with the changes mandated by law, we will see further reductions from phased-in transitions to even lower fees through 2002. In addition, increases in the Medicare-eligible population and the anticipated increases in the utilization of services by Medicare recipients will result in further reductions in payments to all physicians. Congress has effectively capped annual Medicare spending. The variable conversion factor, which determines the reimbursement level for each resource-based Medicare service, will be lowered annually as total Medicare services increase. The dynamics of the process that has brought us to the Address reprint requests to Dr Gardner, Division of Cardiothoracic Surgery, Hospital of the University of Pennsylvania, 4 Silverstein, 3400 Spruce St, Philadelphia, PA 19104; e-mail: gardnert@mail.med.upenn.edu.