Grassley: Fixing Flawed Medicare Formula is Key for Iowa

Statement

Grassley: Fixing Flawed Medicare Formula is Key for Iowa

It seems obvious enough. If a portion of every paycheck is taxed to help finance Medicare for current retirees and the disabled, Iowa workers deserve an equitable return on those dollars once they reach retirement.

What may seem obvious is obscured by Washington's way of doing business. Consider the flawed Medicare payment system that cheats doctors who treat patients in rural states, including Iowa, New Mexico, Arkansas and Missouri.

Due to an antiquated federal formula, an Iowa worker's lifetime of taxable wages is paying for a system that rewards urban states whose practice of medicine reflects overutilization to bring in more Medicare dollars. The formula doesn't reflect an accurate accounting of doing business in rural states. Iowa doctors practice cost-effective medicine. And Iowa Medicare patients tend not to overuse health care. Rural health care providers are essentially penalized for providing efficient, quality care to Medicare patients in Iowa.

Iowa hospitals and physicians get the short end of the stick compared to providers in other regions of the country, and I'm working to change this unfair Medicare reimbursement system.

I've fought for a long time, with bipartisan support, against the urban-oriented House of Representatives, to transform Medicare's outdated payment system with one that rewards high-quality patient care. Medicare needs to recognize that taxpayers and patients can receive better value for their money if payments are tied to quality outcomes, not quantity. Under current law, Medicare turns healthcare into retail medicine: the more tests, screenings and procedures, the more revenue generated. That's not in the best interest of quality patient care or taxpayers.

From my leadership position as Chairman and now Ranking Member of the Senate Finance Committee, which has legislative and oversight authority for Medicare, I have fought to secure immediate and long-term solutions to the problem that will bring more equity to Iowa taxpayers, health care providers and Medicare patients.

Over the years, I have won efforts in Washington to secure better federal payments for Iowa hospitals and physicians that serve a large percentage of Medicare patients in rural areas. Without these higher payments, many Iowans would lose access to health care services close to home. I'll keep up my crusade to keep Iowa's hometown hospitals and physician practices open for business.

During debate on the new health reform law, I secured an amendment that would help fix the unfair physician payment formula. It should bring more equity and accuracy and importantly, a national solution, to the flawed payment system by improving the data the federal government uses to calculate physician practice costs. But, that will only happen if the federal bureaucracy that runs Medicare follows the intent of my amendment and uses more accurate data. Right now, the administration is refusing to change key data in the formula that should reduce geographic disparities and more accurately reflect any local differences in cost. As an example, it's proposing to continue using federal Housing and Urban Development apartment rental data to determine the differences in cost of a doctor's office rent. This is yet another case of Washington nonsense flying in the face of Midwestern common sense. That's why I am working to prevent the Medicare bureaucracy from ripping the rug out from beneath my rural equity amendment.

Right now Medicare officials also are studying the geographic disparity formula to establish more data guidelines. I'm not so sure Iowans stand to benefit from decisions that are linked to the $529 billion in Medicare cuts the new health reform law requires. Call it a hunch.

The new health reform law also includes reforms to the way that Medicare pays hospitals. One of the most significant is value-based purchasing, which has been a longstanding priority of mine. For the first time, Medicare will be basing hospital reimbursement on quality and efficiency. This will shift the emphasis from volume of care to value of care. More importantly, it will help ensure that Iowa hospitals will financially rewarded for providing high quality and efficient care. It's unfortunate that these improvements were packaged in a bill that cuts $529 billion from Medicare, raises taxes and was passed in a partisan effort.

Iowans also stand to lose from one of the special deals added during the last-minute closed-door negotiations on the new health reform law. I exposed this $2 billion sweetheart deal because it benefits five "frontier states" (North Dakota, South Dakota, Montana, Nevada and Wyoming) at the expense of the other 45 states. Even though Iowa hospitals and physicians receive lower Medicare reimbursement rates than most of the five "frontier states," Iowa is not eligible for the new higher payments.

That's why I am working to repeal the "Frontier Freeloader" payment bump. Good public policy dictates Congress ought to improve unduly low Medicare payments for all rural states, not just a few.

The federal government doesn't raise or reduce payroll taxes based on a worker's ZIP code. It shouldn't discriminate Medicare payment rates based on inaccurate geographic disparities. That's why this U.S. senator is fighting flawed Medicare formulas and bureaucratic bungling to secure equity and fairness for all rural Americans disadvantaged by the current payment system.

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