The Medicare-Bill Aftermath: Industry Implications

Congress overruled President Bush's veto of the latest Medicare bill, sealing a big victory for doctors over insurance companies. As we noted last week, the bill puts off an automatic cut in physician fees by limiting subsidies to insurance companies. (Paul Krugman, I should note, offered a take similar to mine on the potential impact of the Medicare battle on healthcare reform.)

The Medicare bill, however, has a number of other implications for industry. In particular, it includes various incentives to push doctors toward digital prescriptions, or "e-prescribing":

The bill calls for Medicare incentive payments for e-prescribing of 2% in fiscal 2009 and 2010, 1% in 2011 and 2012, and 0.5% in 2013. Beginning in 2012, Medicare payments to physicians not electronically prescribing would be reduced by 1%, then 1.5% in 2013 and 2% in subsequent years. The legislation also requires reporting of any e-prescribing quality measures established under Medicare's physician reporting system. While the provisions pertain only to Medicare, other health insurers often follow Medicare and implement similar policies.

So maybe that uphill battle pharmacies and IT vendors have been waging on e-prescribing will get a little easier, although I've long suspected it will take a Medicare mandate -- that is, for the agency to insist that it will only reimburse doctors who are using e-prescription systems -- to get the idea across.

The bill also suspends yet another Medicare pilot project aimed at holding down costs by requiring competitive bidding for durable equipment.

Meanwhile, anyone who thinks this issue has gone away needs to take another look. At the Health Care Blog, inside-the-Beltway healthcare policy watcher Robert Laszewski is already counting down to the next scheduled doctor-fee cut:

The recent Senate and House vote to kill the 10.6% physician fee cut only defers the problem for 18 months. On January 1, 2010, the Medicare physicians are slated to get an automatic 21 percent fee cut!

[...]

So, we have 18 months to just keep heading toward the next cliff (this one twice as big at 21%), let the system degenerate (cash, balance bill, or a crisis in access as docs stop taking patients), or actually start taking some constructive steps forward.