AMA has a laundry list of complaints about HCFA
April 1, 1999
AMA has a laundry list of complaints about HCFA
Gripes range from policies to practices
The American Medical Association’s scathing public criticism of the Health Care Financing Administration marked a calculated decision to go public with what has been an increasingly hostile and combative behind-the-scenes relationship between provider groups and the agency.
This tension is intensified by the massive volume of work assigned to HCFA by Congress over the past several years, the political pressure for the agency to get tough on fraud and abuse while finding a way to save Medicare from bankruptcy, and the general financial pressures and frustration all providers are feeling from having to deal with the changes brought on by managed care.
Feeling that relations with the agency are currently at an impasse, providers now are lobbying Congress to pressure the agency to tone down its attitude and make changes in some of its program decisions. (For a list of complaints, see related story, p. 51.)
HCFA, on the other hand, says it is simply giving some strong medicine to an independent provider-based system that still generates $20 billion a year in improper Medicare claims, while implementing a massive array of new programs designed to keep a sinking Medicare program afloat into the 21st century.
The AMA says the Sustainable Growth Rate (SGR) system is a good example of how is HCFA is mismanaging the Medicare fee-for-service program. The SGR is a target rate of spending growth. Cumulative actual spending is compared to cumulative target spending, and payment updates are determined by whether actual spending exceeds or falls short of the target amount. The target is based on annual changes in inflation, Medicare fee-for-service enrollment, real per capita gross domestic product (GDP), and spending due to law and regulation.
HCFA established a fiscal year 1999 SGR of -0.3%, which became effective Oct. 1, 1998. This negative growth target means that unless total physician fee-for-service spending is less in 1999 than it was in 1998, next year’s physician payment update could bring a payment cut. A key HCFA assumption underlying the negative SGR is that the number of beneficiaries enrolling in Medicare+Choice plans will grow by 29% in fiscal 1999. "With the recent HMO withdrawals from Medicare, this assumption seems seriously overstated and obviously erroneous," the AMA says.
"In fact, the rate of increase in managed care enrollment has been declining since July, and the most recent monthly data show an actual decline in managed care enrollment," the AMA continues.
HCFA already has made one significant error in setting the first SGR for 1998. In October 1997, HCFA projected 1998 GDP growth of 1.1%, but 1998 GDP growth is now estimated to have been at least 2.8%. When combined with other, smaller projection errors in the 1998 SGR, HCFA made a net underestimate in the 1998 SGR of 1.5%. With Medicare spending on physician services currently at about $43 billion annually, the projection errors led HCFA to set the payment update for 1999 about $645 million lower than it should have been.
Because the SGR system is cumulative, the projection errors will be compounded with each year’s payment update calculation if left uncorrected. If the cumulative SGR becomes merely an accumulation of erroneous HCFA estimates, this would defeat the whole purpose of the spending target system. The level of underfunding of Medicare physician services due to these errors could grow to the $1-2 billion range as early as next year, the AMA estimates. (For another federal agency’s views of the SGR system, see story, p. 59.)
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