Bureaucratic Malpractice

By Gribbin, August | Insight on the News, December 11, 2000 | Go to article overview
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Bureaucratic Malpractice


Gribbin, August, Insight on the News


Critics of the agency that oversees Medicare claim that its cumbersome bureaucracy cripples medical innovation and cheats the sick. Now Congress has gotten into the debate.

A bipartisan group of 31 congressmen has petitioned the House Ways and Means Committee to force reforms on the Health Care Financing Administration (HCFA) -- the agency that runs Medicare -- in order to eliminate "barriers to innovative medical technologies." The legislators, along with makers of medical devices such as heart pumps and hip replacements, claim that the HCFA has delayed or denied reimbursement for breakthrough medical tests, therapies and devices, and that it sometimes sets reimbursement rates so low that doctors and hospitals can't afford to apply the new remedies. Sen. Orrin G. Hatch, R-Utah, has introduced a companion measure in the Senate, and 19 patient and professional medical groups have made a similar appeal to Capitol Hill.

Complaints about the HCFA are not new. It has been the subject of numerous critical reports by the General Accounting Office. One released last spring declares the HCFA typically "falls short in addressing weaknesses repeatedly cited in audits and other reviews." Indeed, Congress last year passed a measure requiring the agency to create a new payment method to cover innovative medical technologies.

The HCFA has implemented a "new, open and accountable coverage process" that it says will facilitate prompt coverage. But the legislators and their allies are not satisfied, pressing forward with the Medicare Patient Access to Technology Act. Among other things, this measure would force the financing administration to update Medicare payment programs each year, to improve and report annually on the "timeliness and appropriateness of reimbursement decisions," and to open for scrutiny certain decision-making procedures.

HCFA is the agency within the Department of Health and Human Services that manages Medicare, the $200 billion federal health-insurance policy and program that covers 38 million Americans age 65 or older, plus the disabled and those with permanent kidney failure. The agency's 4,200 civil servants also administer Medicaid, the insurance program for those with low incomes, and the $24 billion Children's Health Insurance Program. Additionally, they regulate and certify certain activities of hospitals, nursing homes, home health agencies and intermediate-care facilities for the mentally retarded.

The Social Security law that created Medicare in 1965 demands that HCFA limit its payouts to medical tests and procedures that are deemed "reasonable and necessary." Mostly, though, HCFA leaves such decisions to 51 "local contractors" -- all private insurers who process and pay Medicare claims. Critics of the system question whether private insurers -- who may or may not be medically trained -- are capable of judging whether a test, device or procedure is necessary or reasonable. Furthermore, since local contractors make the decisions, coverage for tests and procedures may be approved in one community and denied in another. And the case-by-case method requires the same decisions to be made over and over again.

The Food and Drug Administration (FDA) figures in all this, too. Before the financing administration even can consider covering a new test, device or procedure, it must pass rigid FDA scrutiny as "safe and effective," earning an FDA "code." Physicians and medical-device makers have problems with the way codes are granted. It takes 600 to 800 days for the agency to process a coding application -- an unreasonable length of time, they say. What's more, the agency often requires manufacturers to demonstrate six months of "market experience" before they even can apply for a code.

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