Medicare: The Perpetual Balance Between Performance and Preservation

Journal of Contemporary Health Law & Policy (1985-2015), Aug 2014

Craig B. Garner

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Medicare: The Perpetual Balance Between Performance and Preservation

Journal of Contemporar y Medicare: The P erpetual Balance Between Performance and Preser vation Craig B. Garner Part of the Health Law Commons Recommended Citation Craig B. Garner, Medicare: Th e Perpetual Balance Between Performance and Preservation, 30 J. Contemp. Health L. & Pol'y 279 (2014). Available at: http://scholarship.law.edu/jchlp/vol30/iss2/6 - Article 6 Follow this and additional works at: http://scholarship.law.edu/jchlp “Confusion is a word we have invented for an order which is not understood.”1 Passed by Congress and signed by President Lyndon Johnson into law in 1965, Medicare2 has weathered storms from all directions, growing to be the preeminent standard for health insurance in the United States.3 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.4 The most recent climate of reform includes changes implemented by the Patient Protection and Affordable Care Act (“PPACA”).5 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   * Craig B. Garner is an attorney and health care consultant, specializing in issues surrounding modern American healthcare and the ways in which it should be managed in its current climate of reform. Mr. Garner’s law practice focuses on healthcare mergers and acquisitions, regulatory compliance, and counseling for providers in all matters pertaining to contemporary healthcare in the United States. Mr. Garner is also an adjunct professor of law at Pepperdine University School of Law, where he teaches courses on Hospital Law and the Patient Protection and Affordable Care Act. 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.6 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 1965.7 Medicare’s original cost-based system gave way in the 1980s to the Prospective Payment System (“PPS”),8 an event noted by many with great concern.9 Under PPACA, the Medicare system takes another monumental step as it incorporates elements of performance into the PPS.10 Formulaic and confusing, Medicare’s recent approach to provider reimbursement has been likened to Finnegan’s Wake by James Joyce,11 a book that some critics 6. Compare Herrymon Mauer, The M.D.’s Are Off Their Pedestal, FORTUNE MAG. 138, Feb. 1954, with Kevin Vachon, Confused and Disengaged About Health Care, PORTLAND DAILY SUN (May 15, 2013, 4:04 PM), http://www.portlanddailysun.me /index.php/opinion/columns/9355-confused-and-disengaged-about-health-care. 7. In Medicare’s early years, “unrestricted cost reimbursement became the modus operandi for financial American medical care.” Rick Mayes, The Origins, Development, and Passage of Medicare’s Revolutionary Prospective Payment System, 62 J. HIST. MED. & ALLIED SCI. 21, 24 (2007). According to Sheila Burke, Chief of Staff of Former Senator Robert Dole: “Medicare’s traditional model of cost reimbursement was insanity. On the face of it, it encouraged people to do more; it paid them to do more and not in any particularly rational way.” Id. at 22 (emphasis in original). 8. First, the Tax Equity and Fiscal Responsibility Act (“TEFRA”) directed the Secretary of Health and Human Services to develop a proposal for legislation that would provide for reimbursement “on a prospective basis.” Pub. L. No. 97-248, § 101(c), 96 Stat. 324, 335 (1982). The following year, Congress created the “Prospective Payment System” (“PPS”), which hospitals first became subject to on October 1, 1983, and was phased in over a period of four years. Alvarado Cnty. Hosp. v. Shalala, 155 F.3d 1115, 1119 (9th Cir. 1998) (citing 42 U.S.C. § 1395ww(d)( 1 )(A)(i) (2012)). 9. See, e.g., Ross Mullner & David McNeil, Rural and Urban Hospital Closures: A Comparison, 56 HEALTH AFFAIRS 131 (1986). 10. See, e.g., Matthew J. Press, Limits of Readmission Rates in Measuring Hospital Quality Suggest the Need for Added Metrics, 6 HEALTH AFFAIRS 1083 (June 2013). 11. See, e.g., Catholic Health Initiatives Iowa Corp. v. Sebelius, 841 F. Supp. 2d 270, 270, 270 n.1 (D.D.C. 2012), rev’d by 718 F.3d 914 (...truncated)


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Craig B. Garner. Medicare: The Perpetual Balance Between Performance and Preservation, Journal of Contemporary Health Law & Policy (1985-2015), 2014, Volume 30, Issue 2,