Medicare: The Perpetual Balance Between Performance and Preservation0

This article was first published in the Journal of Contemporary Health law & Policy on August 1, 2014.

iStock_000039923254Medium“Confusion is a word we have invented for an order which is not understood.” — Henry Miller, Tropic of Capricorn

Passed by Congress and signed by President Lyndon Johnson into law in 1965, Medicare has weathered storms from all directions, growing to be the preeminent standard for health insurance in the United States.  The idea of losing Medicare as a vital public benefit still remains the single greatest fear with which each passing generation of Americans must contend, and yet, these challenges over the past fifty years, designed to fortify Medicare’s foundation and ensure its longevity, continue to take a toll on the program.

The most recent climate of reform includes changes implemented by the Patient Protection and Affordable Care Act (“PPACA”).  The PPACA is designed to expand coverage for a broader group of people, yet it adds unprecedented layers of complexity such that it may be but a matter of time before the confusion experienced by today’s providers proves to be Medicare’s undoing altogether.  The decades of trial and error upon which health care in the United States have been built, at least from the point of view of both physicians and lawmakers who watch from the sidelines, may give way to confusion and disruption industry-wide as a result of newly enacted regulations.

Today, Medicare is the preeminent standard for health insurance in the United States, expanding despite fluctuations in the economic, political and social climate since its initial passage.  However, in its struggle toward sustainability, the Medicare Program must understand the resulting consequences as it distances itself further and further from its original simplicity in 1965.

Medicare’s original cost-based system gave way in the 1980s to the Prospective Payment System (“PPS”), an event noted by many with great concern.  Under PPACA, the Medicare system takes another monumental step as it incorporates elements of performance into the PPS.  Formulaic and confusing, Medicare’s recent approach to provider reimbursement has been likened to Finnegan’s Wake by James Joyce, a book that some critics warn requires “skeleton keys” to understand.  In many ways, the need for hospitals and physicians to understand these performance-based measures may seem less important when fear of Medicare insolvency looms in the distance,13 especially as it relates to Medicare Part A (hospital insurance benefits for inpatient services) and Medicare Part B (supplemental insurance for outpatient services, among other things).  Irrespective of the fleeting grasp providers may have over PPACA’s new Medicare system, hospitals and physicians alike are mindful that the PPS as they once knew it is gone, replaced in part with the beginnings of a performance-based Medicare in which they may lose precious revenue, one percentage point at a time.

The entire article can be viewed here.

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