Medicare officials, alarmed at the sharp growth of payments to doctors, are exploring new ways to rein in program outlays, including an immediate freeze on the fees Medicare pays to doctors.
In the longer run, the officials said, patients could be given financial rewards for using doctors who practice conservative medicine and who avoid costly extra services of marginal usefulness. Lists of such doctors would be made public.
According to an internal memorandum, senior officials at the Department of Health and Human Services, which administers the program, have agreed on at least four tentative approaches to controlling outlays under Medicare Part B, which pays for doctor bills and certain other items. Most of the proposed changes would require approval by the Office of Management and Budget, White House and Congress.
Part B payments to insurance carriers increased by about 20 percent in the year ending June 30, a major reason why officials decided to raise the monthly patient premium paid by more than 30 million enrollees from $17.90 this year to $24.80 next year -- the largest increase in program history.
The memorandum listed these cost-control options:For the short run, freeze rates Medicare pays doctors for nonprimary care services, "effective as soon as possible," instead of raising payments to keep up with inflation. Also in the short term, intensify reviews by major insurance companies to identify excessive, unnecessary and ineligible treatments by doctors. For the longer run, examine medical records by computer to identify doctors who avoid large amounts of medically unnecessary or questionable tests and procedures.
Medicare Administrator William L. Roper told a House committee last month that a recent study found that 14 percent of coronary-bypass operations reviewed were "clearly inappropriate" and 30 percent were "questionable."
After identifying doctors showing sound practice patterns, which Roper said is extremely difficult, Medicare would encourage patients to choose those doctors. The patient's share of the payment could be reduced to 10 percent instead of the current 20 percent, or the patient could pay 30 percent for a doctor with poor practice patterns.
Another long-range option would set general targets for total Medicare spending on doctors in each region or locality. If the target were exceeded, fees would be reduced.
Dr. James S. Todd of the American Medical Association said, "All four of these proposals misunderstand what is driving health care costs today . . . the increasing number of elderly, the advancing age of the elderly . . . and the rapid development of new technology."