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✓ A panel of health care policy experts offered a critical analysis of challenges and opportunities for the Medicare program in the future.

WASHINGTON—Mark McClellan, MD, PhD, has left his position as Administrator for the Centers for Medicare and Medicaid Services (CMS), and the 77 million baby boomers will start aging into Medicare in the near future. The impact of these and other changes, including impending physician payment cuts that threaten patient access, are likely to present major challenges for neurologists and other physicians who care for the nation's 43 million elderly and disabled Medicare beneficiaries in the coming years.


Dr. Cecil Wilson: “If Congress did not act, we fear that physicians would be forced to make difficult decisions.”

“Medicare for neurologists will all depend on what Congress does to eliminate the sustainable growth rate (SGR) formula,” said Michael J. Amery, an attorney who is the AAN Legislative Counsel.

At press time, Congress had passed a bill that would avert a scheduled 5 percent reduction to Medicare reimbursements in 2007.

“If Congress did not act, we fear that physicians would be forced to make difficult decisions,” agreed Cecil Wilson, MD, chairman of the board of Trustees of the American Medical Association (AMA).


Dr. Paul B. Ginsburg: “My perspective is that the demographic trends are manageable. The real problem is that healthcare spending is growing so much faster than income.”

“Nearly half of physicians say Medicare cuts will force them to decrease or stop taking new Medicare patients,” added Dr. Wilson.


Against this background of uncertainty and ferment, a panel of experts discussed the future of Medicare at a forum here in November last month.

“Medicare in many ways mimics exactly what's happening in the rest of the healthcare system,” said Marilyn Moon, PhD, vice president and director of the Health Program at the American Institutes for Research in Silver Spring, MD. “This is a very strange market.”

“Medicare beneficiaries have no incentives to be cost conscious,” agreed Paul B. Ginsburg, PhD, president of the Center for Studying Health System Change in Washington, former executive director of the Physician Payment Review Commission, and former deputy assistant director of the Congressional Budget Office. Nonetheless, he said, “My perspective is that the demographic trends are manageable. The real problem is that healthcare spending is growing so much faster than income.”

In a Nov. 16 article in the New England Journal of Medicine, Dr. Ginsburg wrote that small but important steps to improve the accuracy of Medicare inpatient hospital rates could help to ensure that Medicare patients receive the care that is best for them, regardless of provider cost incentives (2006;355:2061–2064). “Without policies that ensure more accurate payment methods, providers will increasingly gravitate toward the medical problems and procedures that boost their bottom lines, and the care we receive may not be the care we need,” wrote Dr. Ginsburg.

Dr. McClelland placed a great deal of emphasis on Medicare pay for performance (P4P) initiatives, but P4P is no magic bullet, said panelists. “That's another buzz word, and I'm skeptical about it,” said Dr. Moon. “What happens when people don't want to go to the ‘below average’ physicians?” Dr. Ginsburg added, “My perspective on P4P is that the magnitude of the upside from it is quite limited. I'm concerned that all this energy might go into P4P to the neglect of other possible [Medicare] solutions.”


Mike Amery: “Starting with a cut of five percent on Jan. 1, 2007, rates under the SGR are scheduled to be cut by nearly 40 percent over the next nine years.”

A 2006 Institute of Medicine report recommended that Congress allocate funds for Medicare P4P and create provider-specific reward pools from a reduction in the base pay for each class of providers, including physicians.

But now that P4P advocate Dr. McClellan has left CMS, what will happen to that initiative? No one knows, but an AAN work group is focusing on helping neurologists prepare for P4P initiatives generated either through governmental or private payers. This work group has created five task groups focusing on monitoring legislation (federal and state) and CMS P4P activities; identifying private/third-party payer relations; quality indicator development; P4P implementation strategies; and P4P communication/education strategies.


Much of the Medicare panel discussion in Washington focused on Medicare Part D, the voluntary outpatient prescription drug benefit available to all 43 million elderly and disabled beneficiaries who enroll in private plans approved by Medicare to offer drug coverage.

One area that may need fine tuning is the formulary used in Medicare drug plans, said panelists. “A lot of emphasis now is on formulary schedules that don't make much sense to the patient,” said Dr. Moon. “If we're going to ask people to make choices, then we have to give them the information to make those choices wisely.” She noted that it makes no sense, for example, to pay for an expensive prescription antacid when an over-the-counter product would work just as well. But, she said, “I believe there's going to be a lot of pressure from beneficiaries to keep the formulary broad. Any control over volume is hard to do.”

Dr. Ginsburg said that in the future there could be a fixed government drug price schedule that all Medicare prescription drug plans follow, but that this tactic would be subject to great political pressure. He also said there could also be a government-run Medicare prescription drug plan that competes with private Medicare drug benefit plans

Both Dr. Moon and Dr. Ginsburg warned that there needs to be continual monitoring of Medicare Part D to make sure it covers those who need it most. Despite the fact that Part D provides assistance for the needy (a person with an income less than approximately $15,000 a year and less than about $11,500 in assets), “a lot of low-income folks are falling through the cracks,” said Dr. Moon. Added Dr. Ginsburg, “When I first saw that [Part D] legislation, I thought it really lacked protection for those with chronic health conditions.” Part D has a coverage gap referred to as the “doughnut hole,” where Medicare beneficiaries must pay the full cost for their drugs until their out-of-pocket drug spending reaches a certain sum ($3,600 in 2006 and $3,850 in 2007) and they qualify for catastrophic coverage under their plan. About 9.3 million low-income Medicare beneficiaries qualify for subsidized coverage in the gap.

For its part, the AAN has specific neurology issues relating to all drug formularies. One important issue, for example, concerns coverage of anticonvulsant drugs for epilepsy. The AAN opposes all federal and state legislation that would impede the ability of physicians to prescribe drugs for the treatment of epilepsy.

Complete physician autonomy is necessary for treating epilepsy because for anticonvulsant drugs, generic substitution is sometimes harmful, according to the AAN November 2006 position statement. That is because small variations in concentrations between name-brand drugs and generic equivalents can cause toxic effects or seizures when taken by epileptic patients, according to the AAN position paper. (For highlights of the AAN position paper, see “On Coverage of Anticonvulsant Drugs for Epilepsy Treatment.”)


Highlights from the AAN position paper follow:

  • The AAN opposes generic substitution of anticonvulsant drugs for treating epilepsy without the attending physician's approval.
  • The AAN opposes all state and federal legislation that would impede the ability of physicians to determine which anticonvulsant drugs to prescribe for treating patients with epilepsy.
  • Formulary policies should recognize and support complete physician autonomy in prescribing, and patients in accessing, the full range of anticonvulsants for epilepsy.
  • The AAN opposes generic substitution of anticonvulsants for patients with epilepsy at the point of sale (in the pharmacy for example), without prior consent of the physician and the patient.
  • The AAN supports the use of newer-generation anticonvulsant drugs in the treatment of epilepsy.
  • The AAN opposes cost-based strategies such as high co-pays on newer generation antiepileptic drugs that effectively limit therapy options for lower-income patients.
  • The AAN opposes prior authorization requirements by public and private formularies.
  • The complete AAN position paper is available online at


How can Medicare be improved? Marilyn Moon, PhD, Vice President and Director of the Health Program at the American Institutes for Research in Silver Spring, suggested the following solutions for further discussion:

  • Allow a number of Medicare demonstrations and experiments in providing care beyond what Medicare is allowed to do now, and don't expect any of these demonstrations to show cost-savings in the first year – because that is almost impossible to do.
  • Improve the Medicare basic benefits package so that beneficiaries don't have to buy “Medigap” supplemental insurance.
  • Fine tune the Medicare deductibles and co-payments in a way that encourages Medicare beneficiaries to exercise responsible health behavior and that removes incentives to over-use health care services.
  • For Medicare Part D, use evidence-based medicine in drug formularies in a way that is very tough, so there is no incentive to use an expensive prescription drug when an equivalent one that costs less would do just as well.


• Ginsburg PB. Recalibrating Medicare payments for inpatient care. N Engl J Med 2006;355:2061–2064.