Walter Reed: 'An end of an era'

The 102-year-old militiary hospital will shut down Sept. 15 and move its operations to Bethesda, Md.

August 11, 2011 

Low reimbursements are the No. 1 reason physicians say they turn away beneficiaries who use Tricare Standard, the military's fee-for-service insurance option, or Tricare Extra, the preferred provider option, according to Tricare health care provider surveys.

Access to health care for these two groups of beneficiaries could become an even bigger challenge thanks to the convoluted deficit- reduction deal hammered out between the Obama administration and leaders in Congress.

The Budget Control Act of 2011 (S. 365), which President Barack Obama signed into law last week, establishes a two-step process toward reducing deficit spending by $2.4 trillion over the next decade. Step one directs Congress to cut discretionary spending by $917 billion, including $350 billion from defense budgets based on priorities set by a roles and missions study.

Step two has Capitol Hill leaders establishing a 12-member committee of lawmakers, to be divided evenly between Democrats and Republicans. They are to identify an additional $1.5 trillion in reductions from entitlements and tax reforms. This bipartisan committee is to report out legislation agreed to by at least seven of its members by Nov. 23 to produce the required cuts. The full Congress then must vote on the recommendations by Dec. 23.

Republican leaders are vowing to assign to the committee only lawmakers rigidly opposed to revenue increases of any sort, including any tax bump for the wealthy or loophole closing for corporations. Democrats are vowing to protect Medicare, Medicaid and Social Security. This makes for a high likelihood of stalemate.

That's where the risk surfaces regarding access to health care for beneficiaries who rely on Tricare Standard or Extra. If the committee of 12 can't agree or the full Congress votes down its plan, the Budget Control Act inflicts its own formula: automatic cuts of $1.2 billion, half to come out of future defense budgets and the other half from entitlement programs.

"The deal includes an automatic sequester on certain spending programs to ensure that -- between the Committee and the trigger -- we at least put in place an additional $1.2 trillion in deficit reduction by 2013," a White House fact sheet on the arrangement explains.

The arbitrary cut "would be divided equally between defense and non-defense programs, and it would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side."

This last sentence, underlined and made bold in the White House fact sheet, ignores the likelihood beneficiaries still would be hurt as more doctors, feeling underpaid, turn away Medicare and Tricare patients.

Any cut in Medicare provider fees would tighten access to care for Tricare beneficiaries too because, for the past 20 years, Tricare physician fees, by law, have been linked to fees allowed under Medicare. If Medicare reimbursements are slashed, doctors who accept Tricare Standard and Extra patients feel the same financial pain.

Retired Air Force Col. Mike Hayden, deputy director of government relations for Military Officers Association of American, said Tricare users clearly have reason to worry if the 12-member committee fails to reach a deal.

"Anything that lowers payments to providers will negatively impact beneficiary access to both Tricare and Medicare," Hayden said.

Spending-cut mandates in the new budget control law also could thwart efforts to correct a long-standing flaw in the Medicare fee formula, which has threatened access to care for Tricare patients for many years.

The Balanced Budget Act of 1997 attempted to get Medicare costs under control by adopting a mechanism called Sustainable Growth Rate for setting spending targets for physician services. When annual targets are met, doctor rates are to be adjusted by medical inflation. When SGR targets are exceeded, doctor reimbursements are to be lowered.

The problem, critics charge, is that Congress set SGR targets too low from the start, failing to take account of cost-growth factors, such as additional physician services caused by advances in medical technology.

It won't surprise observers of the debt-ceiling fiasco to learn that Congress has lacked the political will either to impose fee cuts called for under the SGR formula or to replace the formula with one more realistic. Instead, at least once a year, physicians who treat Medicare and Tricare patients face the threat of an enormous cut to reimbursements.

The last temporary relief bill from SGR, passed in December 2010, avoided a whopping 25 percent cut in Medicare and Tricare doctor payments set to take effect Jan. 1, 2011. In 2010, Congress passed multiple month-to-month stopgap measures rather than a permanent fix.

If Congress fails to correct the SGR formula again this year, the threatened fee cut hanging over Medicare and Tricare physicians will climb near to 30 percent by the new deadline Jan. 1, 2012.

Now a different automatic trigger mechanism, aimed at Medicare and Tricare physicians by the new budget control law, Hayden said, "places the bigger problem -- the looming SGR fix -- definitely at risk."

The Congressional Budget Office recently estimated that a one-year SGR fix costs the government $22 billion. A permanent fix would cost $280 billion over 10 years. Meanwhile, that hole in Medicare's budget grows ever deeper, and physicians who treat Medicare and Tricare patients face the growing threat of a deep fee cut.

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