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Medicine for an Ailing Health Care System

A Report from America's Internists on the State of the Union's Health Care

President George W. Bush and the United States Congress need to address a myriad of challenges facing the health care delivery system. The system's resources are insufficient to meet current needs and these limited resources are being spread across an ever-increasing array of programs and benefits. At the same time, an explosion of complex bureaucratic requirements are requiring more resources from health care professionals than ever.

With the cost of providing health care rising approximately six percent each year, health care dollars must be spent wisely, with an eye toward the greatest efficiency, not the greatest bureaucracy. As President George W. Bush prepares his State of the Union address and FY 2003 budget proposals, and as the 107th Congress begins its final session, the nation's health must be a top priority.

The President and Congressional leaders must provide clear direction to address the overarching problems facing the health care system.

  • The campaign promises of 2000 to expand health insurance coverage must now be kept. Thirty-nine million Americans without access to health insurance do not receive early treatment for common ailments such as cancer and hypertension, leading to premature deaths and costly late-stage treatments.
  • Prescription drugs must be made available to all Americans at affordable prices and Medicare's benefits need to be modernized. Double-digit inflation for prescription drugs strains both insurers who cover drugs and patients who do not have prescription drug coverage, including the 40 million Americans covered by Medicare. Medicare does not currently provide adequate coverage for preventive and screening services or for serious illnesses.
  • The federal government must provide adequate funding to health care professionals, hospitals, and public health departments who at present are poorly equipped to face threats of biological or chemical terrorism.
  • Congress and the President must adequately fund the Medicare program. Since 1990, excessive cuts that have resulted in payments falling as much as 13 percent behind the rising costs of delivering health care threaten the ability of physicians, hospitals, and other caregivers to meet the needs of current and future beneficiaries; to educate physicians for future generations; and to provide care for the uninsured.
  • Medicare regulatory reform and a strong patient bill of rights must be passed to alleviate the complex and overlapping regulations imposed by payers on physicians and patients. The explosion of red tape required by managed care plans and Medicare drains limited resources, while complex authorization processes pit payers against patients, with physicians and other health care providers in the middle. Excessive paperwork requirements for physicians detracts from their most precious and valuable resource - time spent with patients.
  • A uniform, voluntary reporting requirement for medical errors must be implemented to remove the threat of litigation that currently drives discussions of medical mistakes behind closed doors, rather than into the open, to ensure they are never repeated.
  • Congress and the Administration must make good on the promise of the Health Insurance and Accountability Act (HIPAA) to achieve administrative simplification and greater patient privacy protections. They must provide comprehensive final rules, with a single deadline for implementation and clear directives to safeguard privacy.

The American College of Physicians - American Society of Internal Medicine (ACP-ASIM) urges Congress and the Administration to put aside partisan differences and work together to solve the many problems afflicting the health care system. The following document outlines the ACP-ASIM's recommendations for crucial areas that need to be addressed during the upcoming session of Congress and by President Bush.



The number of uninsured Americans was 39 million in 2000. Substantial growth in this number is likely due to rising health care insurance premiums, accompanied by nearly two million newly unemployed workers during 2001. The jump in unemployment rates alone is expected to increase the number of uninsured by an estimated 1.7 million people. House of Representatives and Senate economic stimulus packages proposed in December 2001 included measures to aid the newly unemployed in maintaining health insurance. Partisan disagreement over how to provide coverage, as well as other non-health-related tax issues, derailed efforts to move this legislation in the first session. A new economic stimulus package will be considered when Congress reconvenes on January 23, 2002.

Call to Action

The College continues to seek health insurance coverage for all Americans. ACP-ASIM encourages Congress to adopt a series of initial steps as the most viable means to reducing the number of uninsured. ACP-ASIM recommends:

  • Enacting a refundable tax credit, with an advance payment option, to allow low-income workers the ability to purchase individual or employer-based health insurance coverage. The tax credit should be high enough to assure that coverage is affordable—i.e. 80 to 90 percent of the cost of an average premium. The tax credit should include an advance payment option so that the credit is available at the time insurance is actually purchased. (ACP-ASIM has published a policy monograph that provides more details on how to develop an effective tax credit.)
  • Expanding Medicaid to all uninsured individuals with incomes up to 100 percent of the federal poverty level and increasing the federal contribution to cover costs of the expansion.
  • Reforming the individual and small group health insurance markets, and development of purchasing pools or cooperatives for the purchase of individual or small group insurance.

The College plans to release a seven-year plan for expanding Access to Health Insurance Coverage in April 2002. This plan will identify specific steps that will result in all Americans having access to affordable coverage by January 1, 2009.

ACP-ASIM policy, comments and letters on access are available online at: http://www.acponline.org/hpp/menu/access.htm

Bioterrorism Preparations


Prior to adjournment last year, Congress passed legislation appropriating $2.5 billion in funding for bioterrorism preparedness. The Senate passed legislation authorizing $3.2 billion in funding for hospitals and clinics, emergency medical stockpiles, the Centers for Disease Control and Prevention (CDC), and food safety. The House of Representatives approved its own measure authorizing $2.97 billion for bioterrorism preparedness. House of Representatives and Senate negotiators will meet when Congress reconvenes to work toward a compromise. However, the amount of funding that would be authorized is a modest "down payment" on what will truly be required to adequately prepare the country for biological or chemical attacks.

Call to Action

ACP-ASIM urges Congress and the President to go beyond the modest "down payment" appropriated in pending authorization measures, and agree on a comprehensive funding plan for the following essential initiatives:

  • Improving Center for Disease Control Prevention capacity, and enhancing communication networks for local and state public health infrastructure, including departments of public health;
  • Improving health care professionals' training and education at all levels;
  • Enhancing hospitals' preparedness by providing more training, equipment, medicine and surge capacity to handle mass casualties;
  • Securing a sufficient national stockpile of smallpox vaccines;
  • Protecting the nation's food supply with more frequent inspection and better surveillance.

ACP-ASIM comments and letters on bioterrorism are available online at: http://www.acponline.org/hpp/menu/bioterror.htm

Patient Bill of Rights


A recent study in New Jersey indicates that nearly half of medical decisions made by managed care companies are reversed when subject to independent medical review. With millions of Americans relying upon managed care entities for their health care, a strong patient bill of rights remains vital to ensuring access to the right care at the right time. During the 107th Congress' first session, both the House of Representatives and Senate passed separate patients' rights legislation. The competing bills agreed on almost all key patient protections-such as access to specialty care and external appeals of health plan denials -but contain substantial differences on whether to hold managed care plans accountable in court. Since a conference committee was never appointed to reconcile the differences, Congress recessed without completing action on patients' rights.

Call to Action

ACP-ASIM will continue to urge the House of Representatives and Senate leadership to appoint a conference committee to reconcile the differences. The College urges Congress and the President to agree on a strong, enforceable patient rights bill that does not undermine existing state protections, including state laws to hold managed care plans accountable in court.

ACP-ASIM comments and letters on the patient bill of rights are available online at: http://www.acponline.org/hpp/menu/access.htm

Patient Safety


The Institute of Medicine's landmark reports about patient safety and quality health care issued in 2000 and 2001 were a call to action for health care providers, medical associations, insurers and federal and state officials to join forces to improve the quality of care. Currently, there is no federal reporting requirement to gather data that will lead to systemic improvements in patient care.

Proposals have been made to release information contained in the National Practitioner Data Bank, a mandatory reporting system for payments made to patients as a result of medical malpractice settlements or judgments. This database lacks meaningful safety data and the data that has been collected has been described as incomplete and inaccurate by the Department of Health and Human Services' Office of the Inspector General.

Health care providers have been reluctant to step forward voluntarily to identify potential safety issues that are necessary to develop best practices due to fear of litigation. Sufficient confidentiality protections are needed to protect patient safety disclosures by health care professionals from being used in litigation.

A legislative effort to introduce a bill calling for voluntary reporting with confidentiality protections stalled last year.

Call to Action

The College calls upon Congress to pass a voluntary reporting bill that will provide confidentiality protections for individuals who report patient safety concerns and medical error incidents.

ACP-ASIM comments and letters on patient safety are available online at: http://www.acponline.org/hpp/menu/psiom.htm

Medicare Regulatory Relief


Physicians and other health care professionals must comply with nearly 100,000 pages of federal Medicare regulations, local regulations and constant updates. Even unintentional errors in complying with complex, often unclear, regulations may result in intensive government audits that disrupt patient care. The House of Representatives unanimously passed a Medicare reform bill in December 2001 that would limit the use of extrapolation (the ability of auditors to examine as few as fifteen records and apply the results to thousands of claims); require Medicare carriers to provide written clarification when requested; require payers to honor those clarifications during audits; and use pilot projects to determine the viability of changing documentation guidelines for evaluation and management (E/M) services. ACP-ASIM testified at a September House of Representatives Ways and Means Committee hearing on this subject that helped bring about major improvements to this bill. Regulatory relief legislation has also been introduced in the Senate. The Department of Health and Human Services has also appointed a new task force on regulatory relief to solicit proposals on changes that the department can make on its own to reduce red tape.

Call to Action

ACP-ASIM urges Congress to build upon the progress made during the first session of the 107th Congress by passing an effective regulatory relief measure in 2002. ACP-ASIM also urges the administration to continue to work with physicians and other health care professionals to institute changes to reduce unnecessary regulatory requirements.

ACP-ASIM comments and letters on Medicare regulatory relief are available online at: http://www.acponline.org/hpp/menu/medref.htm

Medicare Reimbursement Cuts


A 5.4 percent across-the-board decrease in Medicare reimbursement for health professionals' services that took effect January 1, 2002 will exacerbate existing problems for health care providers and beneficiaries. Reduced reimbursements will force providers to cut practice expenditures during a time of increased patient demand. Physicians' reluctance to accept new Medicare patients will likely increase if reimbursement levels continue to decline while the cost of providing services increases.

Congress, the Department of Health and Human Services and the Medicare Payment Advisory Committee have acknowledged that the formula used to update the Medicare physician fee schedule each year does not reflect the rising cost of providing those services. The current formula, based on the sustainable growth rate (SGR), links the annual update for health care providers to the annual percentage change in the Gross Domestic Product in order to limit rising health care costs. The current formula, however, does not adequately reflect the aging of the population and the resulting increase in costs or the creation of new technologies. As a result, the Medicare program is forced to stretch already strained resources while waiting for legislative action.

Despite a strong showing of bipartisan support for legislation to limit this reduction during the first session of the 107th Congress, the legislation fell victim to congressional leaders' unwillingness to provide any additional funding to the Medicare program at this time.

The future of medical schools and teaching hospitals are threatened by cuts enacted by the Balanced Budget Act of 1997 (BBA '97). These institutions not only train future physicians, but are an important part of the nation's safety net for the uninsured. Legislation supported by the College and others in 2000 temporarily prevented scheduled reductions in Medicare funding for the indirect costs of graduate medical education during FY 2001 and FY 2002. However, budget cuts are still scheduled for FY 2003.

Call to Action

The College calls on Congress to:

  • Repeal the flawed SGR formula for the Medicare physician fee schedule and replace it with a method that results in fair and predictable updates that keep pace with the costs of providing services to beneficiaries.
  • Restore the 5.4 percent cut in Medicare payments to physicians that went into effect on January 1, 2002.
  • Enact legislation to prevent the scheduled cuts in payments for teaching hospitals and other "safety net" providers in FY 2003 and fully restore funding to the pre-BBA '97 levels.

ACP-ASIM comments and letters on Medicare reimbursement cuts are available online at: http://www.acponline.org/hpp/menu/physicianpmt.htm

Medicare Prescription Drug Coverage


Nearly 40 million Americans who receive their health insurance through the Medicare program do not receive prescription drug coverage and must turn to secondary insurers to obtain affordable prescription drugs. This approach leaves the lowest-income Medicare beneficiaries vulnerable. They cannot afford to pay for secondary insurance premiums, therefore they must pay the full retail cost of their medications. The Medicare program should also be reformed to provide for better coverage of preventive and screening services and catastrophically-expensive illnesses and to institute other measures to modernize the program. President Bush's principles for Medicare reform, released last spring, provide a good basis for developing an improved Medicare program.

Call to Action

The College urges Congress and the President to seek agreement on a Medicare reform bill that includes a prescription drug benefit and a sustainable financing mechanism to support the benefit. Congress and the President should also begin work on additional long-term reforms that would allow better coverage for preventive and screening procedures and serious illnesses and improve the management of the program. If comprehensive drug coverage cannot be enacted because of budget constraints, the College supports a more narrowly targeted Medicare prescription drug benefit that alleviates the burden on low-income beneficiaries.

ACP-ASIM comments and letters on Medicare prescription drug benefits are available online at: http://www.acponline.org/hpp/menu/presdrug.htm

Health Insurance Portability and Accountability Act (HIPAA)


In response to health care providers, insurers and state Medicaid agencies inability to meet HIPAA-mandated deadlines, Congress has extended by one year the deadline for compliance with the law's administrative standards for electronic transaction and code sets. Two other mandates still exist: the privacy standards, which have been published in a final rule but are ever-changing, and the security standards, which have yet to be issued in final form. Physicians, insurers and health care facilities face three separate and costly system upgrades if they are forced to comply with the regulations in this piecemeal fashion.

Call to Action

ACP-ASIM will continue to work with Congress to extend the deadlines for compliance until all of the HIPAA rules have been published and adequate implementation time has been determined. Additionally, the College calls upon Congress to enact a comprehensive privacy law, rather than relying on administrative processes to safeguard the public.

ACP-ASIM comments and letters on confidentiality are available online at: http://www.acponline.org/hpp/menu/confident.htm

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