Rep Hayworth: Doc Pressure Needed for SGR, Liability Reform

Eli Y. Adashi, MD, MS, CPE; Rep Nan Hayworth (R, New York), MD


June 15, 2012

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In this segment of Medscape One-on-One, US Rep Nan Hayworth (R, New York), a physician-legislator, urges physicians to pressure Congress to pass liability reform and find a permanent solution to the sustainable growth rate (SGR) formula.


Dr. Adashi: Hello. I am Eli Adashi, Professor of Medical Science at Brown University and host of Medscape One-on-One. Joining me today is Dr. Nan Hayworth, an ophthalmologist who is presently serving as Representative of the 19th Congressional District of the State of New York. Welcome.

Dr. Hayworth: Thank you, doctor.

The Supreme Court's ACA Deliberations

Dr. Adashi: These days, it's almost impossible not to launch the conversation without reflecting on the recent Supreme Court deliberations on the Affordable Care Act (ACA). I am certain our viewers would be thrilled to hear what a seasoned observer such as yourself might be thinking about what transpired, what could potentially follow, and what it would mean ultimately for healthcare.

Dr. Hayworth: Interestingly enough, my observations are made from the congressional perch, which informs my thoughts about the consequences of the decision. We don't have an inside track as far as the Supreme Court's deliberations per se, but I anticipate that they will find the individual mandate unconstitutional. Then, the more exciting question and the pressing question is, what will happen to the remainder of the law? Is it severable? Will the entire law be void, if you will?

I think it's 50-50. I think the mandate will go. I don't see how the Commerce Clause can be stretched to that degree. Certainly, people like me, and the Republicans from the House of Representatives -- although we have some Democrat colleagues who feel similarly -- feel that the ACA has worthy goals that we should honor. But, as a law, it is damaging to us and does need to be replaced, and the exciting question is, how do we do that? We are thinking about that question vigorously in the House, as you might imagine.

Healthcare Agreement on Both Sides of the Aisle

Dr. Adashi: The sense that you're conveying is that there may be elements in the ACA that both sides of the aisle could embrace. Could we discuss at least one of those elements that may be a source of agreement for both Republicans and Democrats?

Dr. Hayworth: Most of us love the fact that the law acknowledges the need for affordable, portable health insurance and supports access to good, affordable care. Many people have expressed a desire to retain the provision that requires insurers to provide coverage for dependents up to age 26 years. That's a fairly straightforward task because it's not a very costly population, but fundamentally, the whole idea of how we approach a paradigm shift in how we provide healthcare in the United States is the most compelling question.

My contention is that we face a paradigm shift at this point no matter what. The ACA was essentially an attempt to introduce a mechanism very much like the National Health Service, the United Kingdom's publicly funded healthcare system, onto the consumer landscape that is US medicine. But I would contend that we have a very different medical culture in the United States than they have in the United Kingdom.

A Unique Healthcare Solution for the United States

Dr. Adashi: We need an American solution. The American solution might not be comparable to its European counterpart.

Dr. Hayworth: Yes, that would certainly be my contention, having practiced medicine. I trained at Cornell University and then migrated to the New York metropolitan area, which of course has very sophisticated medical consumers with high expectations. That is not necessarily the case throughout the United States, as you and I both know, but certainly the vision of the American medical consumer is that he or she expects the most advanced modalities to be available to them, and to be available immediately when they're needed. That is the natural evolution of what happened in US healthcare starting at the beginning of the 20th century.

We are a medical culture, where our training is intense. We want to provide healthcare vigorously, and that requires resources. The third-party payer was an artifact of employment policy after World War II, and we later introduced a public payer -- that was Medicare -- in 1965. We have created a very costly healthcare structure, and the ACA is an endeavor to deal with that, but I think it is sown with the seeds of its own destruction, and this is especially true if the individual mandate is ruled unconstitutional. That's because the ACA hinges on 2 factors: an individual mandate and a mechanism through which costs will be controlled, which in this case is the Independent Payment Advisory Board (IPAB) -- which I don't view as a death panel -- but access to care should be determined by providers, whether it be a physician or a hospital, and not by an advisory board.

Traditional Medicare vs Premium Support

Dr. Adashi: With that in mind, I thought we could turn our attention to Medicare, which is likewise an ongoing challenge that presently seems to be addressed in 2 fundamentally different ways. On the one hand, it is defined by the ACA and the Obama administration. On the other hand, there is a proposal from House Budget Committee Chairman Paul Ryan (R, Wisconsin) and Sen Ron Wyden (D, Oregon), which is supported by the majority of Republicans in the House of Representatives. Would you take a minute to compare and contrast these opposing views and state your preference of the 2?

Dr. Hayworth: Our challenges with Medicare are parallel to our challenges with healthcare. Medicare is such an important part of US medicine, but it certainly reflects the problems created by the ACA in that we have a third-party payer mechanism that oversees care to recipients.

Our seniors very much rely on Medicare, but we have a very costly delivery system that was introduced because Medicare was not indexed for life expectancy. What was designed to be a fairly limited program when it was introduced in 1965 is not as limited now, because people live 20 or 30 or more years after they become eligible. I certainly see this with my own parents, who are 88 and 91 years old, and I wouldn't trade a day with them. But what they paid into Medicare is far outstripped by multiples of 3 or more in terms of what will be provided to them because the Medicare trust fund is rapidly running out of its resources. There is now a negative balance in the account, and the predictions have been accelerated in terms of its expiration. Some estimates say it will be gone by 2016.

How do we assure Americans who are counting on Medicare that it will be available in generations to come, and how do we honor the obligations that we have to our seniors who absolutely have no alternative to Medicare? I think that the Ryan-Wyden proposal, which was incorporated into the budget bill that we just passed through the House but is unlikely to pass the Senate, tries to preserve Medicare for future generations.

With that bill, we honor the obligations we have to our current seniors and members of the baby-boom generation who are under 55. Ten thousand baby boomers a day are enrolling in Medicare, which is why the trust fund is running out so rapidly. But for those who are age 55 or younger, there will be a new way of providing alternative benefits through a consumer-based, consumer-driven mechanism rather than through mandates and boards that are coercive. We want to be able to empower our citizens to make sensible decisions, and that principle also applies to the ACA.

What the Ryan-Wyden proposal does is provide for regional differences in the cost of care, and in medical consumer culture, if you will. It does allow the option of participating in a traditional fee-for-service Medicare plan, but also gives seniors the option of purchasing their own insurance with premium support. This is not a voucher. Premium support carries with it an assurance that you will have the care you need -- not limited by means and not limited by preexisting conditions, no matter how severe.

There are parallels between premium support and Medicare Part D, which has an array of plans. It does require consumer engagement, but I think that's a reasonable request of intelligent people who are empowered to make those decisions.

Dr. Adashi: In a way, markets vs mandates.

Dr. Hayworth: Exactly. That's the American way, and that's important. It's important to have that acceptance.

Medicaid Block Grants

Dr. Adashi: While we are discussing safety-net arrangements, our viewers probably would appreciate your insight into Medicaid in particular as it relates to the state of New York, and what could change for better or worse if Medicaid shifted from the current federal/state partnership to a block grant arrangement.

Dr. Hayworth: In New York, there are heavy burdens on our counties in particular because of the Medicaid reimbursement structure, and the way in which the states require individuals, communities, and counties to participate in the cost-sharing of Medicaid. Every state varies in terms of need when it comes to Medicaid, which is why a theoretical virtue of a block grant or a block grant arrangement is that it streamlines the federal role to allow more dollars to flow into care.

But it also means problems for a state like New York, which has built up a very heavy Medicaid infrastructure and an enormous menu of services because they've been incentivized to do that by a federal match. For a state like New York, a block grant is a problem, and it's a problem for hospitals. We do want to provide for the neediest among us. So the crux of the issue really is, how do we provide for that virtuous goal to be fulfilled?

I think if we try to look for a model with a consumer-driven mechanism that works, we can look to the state of Indiana and Governor Mitch Daniels, who, with a Democrat and Republican legislature, put together a program called "Healthy Indiana," which funds health saving accounts for the state's Medicaid recipients with state funds. They happen to pay for savings accounts through a cigarette tax, but any state could fund it any way they want to.

Indiana also allows an easy mechanism for state employees to fund their own health savings accounts through pretax dollars, and what they found is that the people who hold these accounts have dealt with them intelligently; no one falls through the cracks, and most of them buy catastrophic insurance. This is not what the late economist Milton Freeman termed as "very costly prepaid healthcare"; it's catastrophic insurance to cover the big expenses. These employees pay for routine care, diagnostics, pharmaceuticals, and so on out of their savings accounts, and it's been very well received.

Voluntary participation by state employees went from 4% when it started 4 years ago to now over 90%, if I'm not mistaken; the state has saved tens of millions of dollars, and so did the savings account holders. It's a model that could work across the country.

Dr. Adashi: Indiana may have crossed the bridge, or has begun to do so, while other states may well have to follow suit?

Dr. Hayworth: In a nonpartisan way, yes sir. I talk about Healthy Indiana whenever I can because that's a great model to look at. It's a consumer-driven system that allows a market mechanism to provide appropriate cost controls. When Medicare came in, that's when the cost of medical care soared in the United States. Because when the federal government is writing the checks, there's not the same sort of market mechanism in place to control costs.

A Solution for the Sustainable Growth Rate?

Dr. Adashi: Another issue that is obviously of great interest to physician providers is reimbursement under Medicare and the constraints, or the threat of a constraint, as it relates to the SGR formula. What could you say to our viewers with respect to a likely solution for the SGR? Where is this going to go, and what should we be looking for?

Dr. Hayworth: That is a challenge that really does require the voice of every physician who can devote any energy or thought to this problem. It is a challenge that can also pit certain groups of physicians against others in a variety of ways. Primary care vs specialists obviously comes to mind. The SGR formula has been overridden nearly every year since its inception -- I think it became law in 1998, roughly 13-14 years ago -- and it desperately needs to be reformed. We do not have a clear path on this, and I know that there have been various recommendations for fixing it. I think there's going to have to be a task force approach to find a solution.

We have extended the current payment schedule through the end of this year. I would love to see action taken before the end of this year. The likelihood of that happening is slim to none, at least not until we know what the composition of the next Congress and administration will be. The question is, how do we accommodate the needs of our patients and those who care for them? We talked about it at the beginning of our conversation, but access to healthcare is determined by reimbursement schedules to a certain degree. It's not necessarily a one-to-one ratio, because there is a certain amount of cost-shifting that we've been able to do in practices of all different sizes. It is a painful problem, but one that we can't avoid.

Dr. Adashi: Difficult and not likely to be resolved this year would be probably one way to sum up the SGR issue.

Dr. Hayworth: Exactly, and that is a very unsatisfactory answer, but I do think to solve this issue, we're going to have to have a task force sit down with representatives from all the different physician sectors, including specialist, primary care, academic hospital-based physicians, private practice, and multispecialty groups.

Medical Liability Reform

Dr. Adashi: I don't want to lose our earlier train of thought with respect to medical liability reform. This is another issue that I'm sure providers are keen to hear about from any legislator, and especially from a physician legislator. What could be in the cards for liability reform? Do you believe there should be a national solution, or more of a state-driven solution?

Dr. Hayworth: Absolutely, and we did pass a reform measure in the House of Representatives. It was combined in a bill with the repeal of the IPAB. It was an all-Republican vote for liability reform, which included caps on economic damages, safe harbor provisions, and other sensible things. Politically, it is extremely difficult to pass this measure. There are relationships in terms of the liability industry, if you will.

But we do need appropriate protections from malpractice, from harm. We need recompense when a genuine injury has been committed, but there are far less costly mechanisms that most Americans could embrace. There are institutional barriers that we absolutely have to overcome, and the only way we're going to overcome them is with political pressure. Having served as a case reviewer for New York State's Office of Professional Medical Conduct (OPMC), I know there are far less costly ways of administrating those consumer protections, those patient protections, and of identifying and removing from practice physicians who do not observe appropriate patient protections.


Dr. Adashi: On a personal note, when and where did you make the all-important decision to embark on public service after starting your career as a physician?

Dr. Hayworth: That's a marvelous question. I practiced for 16 years as an ophthalmologist and was delighted to do so. I considered it a gift and a privilege. I worked in a solo practice and in a multispecialty group in New York. I retired from practice in 2005, well ahead of my congressional service, in deference to motherhood. My husband is also a physician; he's a physician executive, and our children needed more time from one of us, so life's necessities came into play.

I stepped out of practice in 2005 and was at home with our sons for 2 years, but I was still active in the OPMC in New York as case reviewer, as well as doing other various things. In 2007, I returned to working outside the home. The boys were older; I was a medical director at a communications company; and, as the 2008 election cycle unfolded, I was the resident voice in Manhattan among colleagues who tended to lean left of the fiscal conservative. I was cutting my rhetorical teeth on what became a calling to observe and honor and promote the cause of individual liberty that I felt was threatened by well-meaning but dangerously costly acts of the administration and in Congress. It was that passion to preserve what is quaint and irreplaceably American. We have had privileges and opportunities that no other society in the history of the world has had, that no other citizens have had. But if a government expands to such a degree that it provides for all, then it invades all as well.

We want to provide for those who cannot do it for themselves, but there are ways in which the best of intentions can become overwhelming, oppressive, and wrong, unfortunately. I've seen so many parallels between public service and medical care because I have to listen to my constituents and understand their problems just as did with my patients in medical practice. I have to care about them primarily. It's not about me; it's about them. It's about the citizens I serve, and I have to craft solutions with them that they can apply effectively in their own lives.

Dr. Adashi: On that note, sincere thanks to Rep Hayworth and to you, our viewers, for joining Medscape One-on-One. Until next time, I am Eli Adashi.