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Fam Pract Manag. 2004 Jan;11(1):25-26.

Medicare payments to increase as part of Rx drug bill

On Dec. 8, amid much criticism, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 passed by Congress in November. While the main feature of the bill is to provide prescription drug coverage for seniors, it also prevents a scheduled 4.5-percent cut in physicians’ Medicare reimbursement for 2004 and ensures increases of at least 1.5 percent in 2004 and 2005.

Estimated to cost $400 billion over 10 years, the bill also includes the following provisions:

  • It establishes a pilot project under which participating doctors will receive higher Medicare reimbursements for meeting or exceeding defined performance standards.

  • It provides grants to physicians to help them implement electronic prescribing programs in their offices, with priority given to physicians who serve a disproportionate number of Medicare patients and those who serve a rural or underserved area.

  • It calls on Medicare to use one payment floor for hospital services in both rural and urban areas, which will result in higher reimbursement rates in many rural areas and eliminate past inequities.

  • It provides, beginning in 2005, a one-time initial preventive physical exam for new beneficiaries within six months of the date they enroll in Medicare.

  • It allows for broader use of health savings accounts.

Details of the Rx plan

Under the bill, seniors will receive prescription drug coverage beginning Jan. 1, 2006, for an estimated premium of $35 per month and an annual deductible of $250. They will pay 25 percent of their annual prescription drug costs below $2,250 and 100 percent of their costs between $2,250 and $5,100; Medicare will cover 95 percent of their costs that exceed $5,100. Low-income seniors (i.e., couples with annual incomes of less than $18,000 and little savings) will pay reduced or no premiums and deductibles. Beneficiaries who are eligible for both Medicare and Medicaid will be shifted to the Medicare program and could experience higher out-of-pocket drug costs, depending on the details of their state Medicaid program.

Until the full drug benefit takes effect in 2006, seniors can purchase prescription drug discount cards. The discount cards, to be available in June, are expected to cost up to $30 per year and provide savings of 10 percent to 25 percent on at least 200 of the most commonly prescribed drugs for seniors.

Seniors’ reaction

In a CNN/ USA Today/Gallup poll of 1,083 adults taken between Dec. 5 and Dec. 7, 46 percent of respondents age 65 or older said they supported the new law, compared with 39 percent who opposed it. Eighty-four percent of seniors said they were concerned the benefit is too complicated for beneficiaries to understand. Medicare officials are expected to begin an informational campaign about the new benefit early this year.

Malpractice premium rates could rise despite new state laws

While several states enacted legislation last year hoping to curb the malpractice insurance crisis, some insurers are going ahead with hefty rate hikes for the new year. In Florida, for example, state officials had determined that malpractice insurers should lower their 2004 rate-increase requests by 8 percent because of a new state law that capped noneconomic damages in most malpractice lawsuits against physicians. But ProNational Insurance and GE Medical Protective have requested average increases of 17.3 percent and 45 percent, respectively. The state’s largest medical malpractice insurer, First Professionals Insurance Co., has requested an 8 percent increase, reports the Nov. 21 Tallahassee Democrat.

In Texas, the Texas Medical Liability Trust, the state’s largest malpractice insurer, has announced a 12-percent cut in premiums for 2004, after increasing rates 128 percent between 1999 and 2003. However, GE Medical Protective and the Joint Underwriting Association have announced rate increases of 19 percent and 35 percent, respectively, according to the Nov. 19 Houston Chronicle. The state’s Department of Insurance expected physicians would save between 8.5 percent and 11.5 percent on premiums in 2004, due to the state’s recently enacted Proposition 12, which capped noneconomic damages in malpractice lawsuits.

PRACTICE PEARLS from here and there

Tracking office-visit cycle time

Do you know how much time your patients spend in your office, from check-in to check-out? If not, consider tracking this measure with the Patient Cycle Tool available at Using the tool, your staff or your patients can track each step of the visit on a simple, one-page sheet. Your practice can then identify areas of improvement, with a goal of minimizing the time patients spend waiting while maximizing their time spent with you or other members of your care team.

PRACTICE PEARLS from here and there

Reduce inappropriate antibiotic usage with a SNAP

Physicians can safely treat children with uncomplicated acute otitis media (AOM) and avoid inappropriate antibiotic use by giving parents a “safety-net antibiotic prescription” (SNAP) and prescribing pain medications such as ibuprofen. A SNAP is a prescription given to parents with instructions to fill it only if symptoms increase or do not resolve after 48 hours. A majority of parents given SNAPs as part of a recent study did not fill the prescriptions and said they would be satisfied with this method of care in the future.

– Siegel RM, Kiely M, Bien JP, et al. Treatment of otitis media with observation and a safety-net antibiotic prescription. Pediatrics. 2003;112(3):527-531.

Discounts for computerization

In an effort to make electronic health record systems and other information technology (IT) affordable to family practices, the AAFP has partnered with several leading companies to offer its members discounts of 15 percent to 50 percent on IT products and services. The partnering companies include A4 Health Systems, GE Medical Systems Information Technologies, Hewlett-Packard, MedPlexus Inc., MedPlus Inc., NextGen Healthcare Information Systems Inc., Physician Micro Systems Inc., Siemens Medical Solutions Health Services Corp., and Welch Allyn Inc.

Suit against health plans continues

A U.S. District Court judge in Miami recently upheld the rights of 700,000 physicians to seek damages in a class-action lawsuit against six managed care companies and said the plaintiffs had legal standing to ask the judge to require the companies to change their business practices, reports the Dec. 10 New York Times. The companies, including United-Healthcare, Coventry Health Care, WellPoint Health Networks, Humana, PacifiCare Health Systems and Anthem Blue Cross Blue Shield, are accused of engaging in racketeering by reducing, delaying or denying physician reimbursement for necessary health care services. The case will go to trial in June. Aetna and Cigna, which were originally named in the lawsuit, have reached separate settlements.

Preventing diabetes step by step

The National Diabetes Education Program (NDEP) has launched a new campaign, Prevengamos la Diabetes Tipo 2: Paso a Paso (We Can Prevent Type 2 Diabetes: Step by Step), geared toward Hispanic Americans at risk for developing the disease. The campaign highlights findings from the Diabetes Prevention Program, which showed that relatively small changes, such as exercising 30 minutes a day five days a week, limiting fat intake, and losing small amounts of weight, can cut individuals’ risk for diabetes in half. The NDEP offers free educational resources in both Spanish and English at

Pay-as-you-go medicine

By accepting only cash, checks or credit cards – and cutting out the insurance middleman – some physicians are reducing administrative hassles and overhead costs for themselves and are cutting costs for their patients at the same time, according to the Nov. 6 Wall Street Journal. Todd Coulter, MD, of Ocean Springs, Miss., says he has been able to reduce his charge for a typical office visit because “I don’t spend all day begging Blue Cross & Blue Shield for money.” Other cited benefits of “pay-as-you-go medicine” include reducing the number of uninsured patients in emergency rooms and improving care for patients with chronic conditions because they can now afford to see their physicians for regular checkups. The article points out that a cash-only arrangement isn’t practical for major medical problems.

Toward a national electronic health record

A national electronic health record (EHR) must be adopted by all hospitals, physicians and other medical providers to reduce medical errors and improve continuity of care, according to a new report from the Institute of Medicine. The report, Patient Safety: Achieving a New Standard for Care, calls for “secure platforms for the exchange of information among providers and patients,” “data standards that will make health information uniform and understandable to all,” and a combination of public- and private-sector investments to cover the costs. Though the report recommends that meeting these standards should be voluntary initially, it suggests eventually making compliance a condition for participating in Medicare and other programs.

A day in the life

Family physicians were featured in Money magazine’s fall 2003 health issue, which showed the American public just how intense the financial pressures of running a medical practice have become. Steven Brezny, a family physician and the subject of Money’s “A Day in the Life of a Doctor” article, works two jobs to keep his year-old, two-physician practice afloat. Still, Brezny seems content with his career. “I’m happy with the choices that we’ve made. We’re either going to go completely bankrupt or be fine,” he jokes.


Copyright © 2004 by the American Academy of Family Physicians.
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