April 23, 2002

April 23, 2002 | News Releases on Health Care

Study: Lower Fees, Bureaucracy Lead Doctors to Refuse New Medicare Patients

WASHINGTON, Apr. 23, 2002-Stung by falling reimbursement rates and frustrated by a growing body of complex rules and regulations, a significant number of doctors are refusing to take new Medicare patients-an exodus that only substantial and speedy reform can stop, a new Heritage Foundation paper says.

In fact, over-regulation and under-payment-particularly the 5.4 percent cut in reimbursements this year-have led some doctors to withdraw from the program altogether, writes Robert Moffit, Heritage's director of domestic policy studies. According to the American Academy of Family Physicians, 17 percent of family doctors refuse to take new Medicare patients.

In many cases, Moffit says, the amount reimbursed doesn't begin to cover the cost of providing care to Medicare patients. It's a situation that promises to get worse: The Medicare Payment Advisory Commission notes that under current law, doctor fees for Medicare services will be cut in each of the next three years, for a total decrease of 17 percent by 2005.

Doctors are losing confidence in the Medicare payment system, Moffit says. More than eight out of every 10 health-care professionals say they don't consider Medicare's fee schedules "fair," according to a May 2000 survey conducted by Yankelovich Partners, a California-based research firm. And 71 percent said the reimbursement schedules don't ensure quality care.

But even better pay wouldn't change the fact that physicians must contend with bureaucratic demands that undermine efficiency and diminish the quality of patient care, Moffit says. A recent American Medical Association survey of doctors found that more than one-third spend an hour completing Medicare paperwork for every four hours of patient care.

How can Congress and the Bush administration change this? For starters, Moffit says, they should reverse the 5.4 percent cut. Indeed, they should "increase Medicare payments and then intensify their review of the regulatory burdens doctors face," he writes.

To address Medicare's problems before they reach crisis proportions-Medicare's population is growing rapidly and the 77-million baby-boom generation starts retiring in 2011-Congress and the administration should make Medicare more like the Federal Employee Health Benefits Program (FEHBP), Moffit says. The popular and successful system covers members of Congress, federal workers and retirees and their 9 million family members.

"This patient-centered, consumer-driven system, based on patient choice and the competitive market, would enhance the quality of health care for a growing number of senior citizens and improve the working environment for seniors' physicians," Moffit says.

Using FEHBP as a model would move Medicare away from the cumbersome central planning that plagues the system now, he says. Every benefit change, biomedical breakthrough or innovation in technology means that Congress must either change the law or authorize Medicare bureaucrats to adjust the system-a slow and inefficient process that often leaves Medicare patients waiting for new treatments that private-sector patients already enjoy.

Medicare needs what the FEHBP provides-a system in which patients select their plans from a wide variety of health-care insurers, all of which include prescription drug coverage, Moffit says. That way, patient choice and market competition hold costs in check and patients get plans that truly fit their needs.

"A competitive system such as this would lead to rapid innovations in benefits and the efficient delivery of medical services, free of the sluggish bureaucratic process and red tape that hobbles benefit setting in the Medicare program," Moffit says. "Doctors, Medicare patients and the taxpayers who fund this system deserve this reform."

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