Colorado Medical Society White Paper on MEDICARE TRANSFORMATION

The Colorado Medical Society advocates for health care coverage for appropriate medical costs for all Colorado residents. Medicare was created to provide such insurance coverage for health care costs for our senior citizens. Recently, the President's Commission on Medicare questioned the fiscal integrity of the program calling for fundamental changes to avert insolvency in Part A Medicare by the year 2002. Additionally, the escalating increase in the cost of paying for Medicare Part B jeopardizes the continuity of that program.

There have been different approaches proposed which can be used to contain the costs of the Medicare program. The first approach would be to cut all provider reimbursement without structurally changing the program. That approach would produce temporary success at best, and provide reimbursement so low that providers would not be financially able to accept Medicare patients. Prior to the era of managed care, many providers could afford to accept very low reimbursement for Medicare, oftentimes at or below cost, and shift those costs to patients and insurance companies who paid full charges for their care. In today's medical market place, no longer is this possible to do. Such low reimbursement would lead to access problems for senior citizens in not being able to find a physician who could afford to care for them.

Another approach to save Medicare would be to develop a competitive marketplace where competitive forces lead to improved quality and service, and lower costs. The Federal Employees Benefits Program which covers the President, the Congress, and civil service employees of the government is such a competitive model which has restrained the rate of rise in health insurance inflation to 6.4% over the last 15 years while the general increase nationally was almost 15%. Such a system empowers the patient to choose the health care delivery system and plan that best meets their personal needs. By involving the patient in the selection and financial responsibilities of the plan, the patient becomes a wiser "consumer" of health care.

In considering the alternatives to transform Medicare, the Colorado Medical Society believes any proposal should include the following features:

reducing the automatic rate of rise in Medicare funding from 10% to a level more reflective of the recent lower health care inflation rate and using these savings to ensure the fiscal integrity of the Medicare programs;

limitation of increased cost sharing to Medicare recipients with limited financial resources, for example, including mechanisms whereby low income beneficiaries are given assistance in paying for Part B premiums;

allowing current Medicare enrollees to continue in the current government run Medicare program, or opting out into a pluralistic Medichoice program. Such a program would provide the choice of a variety of health care delivery systems and plans from which to choose, including fee-for-service, managed care, medical savings accounts and health IRAs. Seniors would be able to continue in employer sponsored plans if so desired;

avoidance of precipitous payment rollbacks that could adversely affect access to care by equally sharing any re-distribution of provider reimbursement so as not to place undue hardship on any group of providers;

involvement of physicians in any mid-course corrections needed to maintain quality and access of our senior members to the program;

professional liability reform;

creation of provider sponsored network option for physicians to offer competitive alternatives to insurance plans (federal rather than state insurance regulations);

provision of antitrust relief so physicians can take advantage of provider sponsored network option and added protection for physician self-regulation activities to promote quality;

regulatory relief through exemption of physician office labs from CLIA requirements so that physicians can provide timely in-office laboratory services to patients at a reasonable cost and overhaul of Stark I and II rules to allow physicians to participate in provision of needed ancillary services to patients;

protection for patients dealing with managed care plans, guarantee that patients be informed about their rights and responsibilities in managed care, provision of an appeals process in managed care deselection decisions of physicians, disclosure of utilization review criteria, and greater physician input on insurance plan policies;

creation of medical education trust to ensure funding for medical education;

creation of a physician workforce planning commission.

Position and Concept Papers