News / 

HealthBiz: Get to know new Medicare law

Estimated read time: 4-5 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

WASHINGTON, Feb 17, 2004 (United Press International via COMTEX) -- There is much more to the new Medicare law for healthcare providers than adding prescription drugs -- some 300 pages worth of reimbursement updates and freezes, additional monies, demonstration projects and the usual tinkering with the regulations that Congress does so well.

The problem for physicians and hospitals is wading through the language and figuring out what applies to them -- something not all are rushing to do.

"They need to (understand the law) and they need to make sure they have someone who really rolls it through the administration," Bob Langston, a partner at Ernst & Young, told HealthBiz.

Langston said he recently asked a group of 15 hospital chief executive officers if they had designated a point person for the new Medicare law within their organization.

"Only one had a person whose job it was to understand the law and communicate that broadly," he said. "The others thought it was a good idea but it was notable that they hadn't really grasped it."

There actually will be $18 billion pumped into the provider market in the first five years of the 10-year law -- with additional monies for indirect medical education. If some reimbursement updates are frozen, however, and healthcare costs continue to rise at double-digit or even high single-digit rates, healthcare facilities need to be ready to react.

Langston said CEOs and other top management still are taking a "real wait-and-see attitude," voicing concern that "this whole thing may change in some fundamental way."

"There is a general nervousness about the deficit and the war in Iraq -- and can we even afford this," he added.

Regulations have not yet been written to implement the law and providers will be waiting to see those details and comment on them. Hospitals and physicians are very wary about what could be called the Balanced Budget Amendment Effect.

The BBA in 1997 took millions of dollars from provider reimbursements, which then had to be returned -- after months of heated physician and hospital protests -- through additional legislative fixes over the next several years. In the interim, however, many in the industry faced staggering financial problems.


All the talk about health savings accounts and refundable tax credits from the Bush administration and healthcare analysts has almost buried plans to bring back association health plans.

President Bush mentioned support for association health plans in his State of the Union address but not many people actually know what they are or what he meant.

These are health plans offered by trade and industry groups to their constituent small businesses. The group concept helps keep the plans affordable so small businesses can afford to offer the benefit to their employees. About 35 percent of small business do not offer health benefits.

Joe Rossmann, a vice president for the industry group Associated Builders and Contractors, said association health plans were great until state laws and regulations got in the way.

Rossmann said the group's carrier eventually decided trying to deal with multiple states and their varying laws and regulations was too much to handle efficiently and economically so the insurer dropped the association plan.

"We went out and talked to 50 insurers and none wanted to do business," Rossmann said. "We even looked at being self-insured but to comply with each state's laws would be more expensive."

A bill now making its way through Congress would put association health plans under federal law, giving associations the same status as large corporations, which provide health benefits for workers across state lines.

Association health plans also could be an option for the 65 percent of small employers that do provide health insurance but are finding increasing premiums are forcing them to either reduce benefits or increase cost-sharing for workers.


The U.S. Preventive Services Task Force says treadmill exercise testing, resting electrocardiograms and electron beam computerized tomography to screen for heart disease are not needed for low-risk adults who do not have symptoms of heart disease.

The task force also found insufficient evidence for or against such testing even for adults at increased risk for heart disease.

More on the guidelines can be found at the Agency for Healthcare Research and Quality's Web site at

Copyright 2004 by United Press International.


Catch up on the top news and features from, sent weekly.
By subscribing, you acknowledge and agree to's Terms of Use and Privacy Policy.

KSL Weather Forecast