April 27, 2007

By Frank Long

Even if Medicare patients are given direct access to physical therapists and the cap on therapy reimbursement is abolished a question of how to pay for the advantages was created when the Medicare Board of Trustees issued a financial distress call earlier this week.

The trustees issued a Medicare funding warning April 23rd that compels the President propose a Congress-approved solution to bring below 45 percent the outlay for Medicare expenses paid for by federal government’s general fund.

Medicare is funded by two sources: Part A expenses that include hospitalization expenses are sustained by payroll taxes; Part D and Part B, which includes outpatient physical therapy services, are supported largely by the general fund.

Outpatient physical therapy reimbursements are covered by Medicare Part B.

Though the move by the trustees casts even more gloom over the darkening outlook for Medicare beneficiaries, at least one budget watchdog group considers the report flawed. The Center on Budget and Policy Priorities (CBPP), a Washginton, DC think tank, offered analysis that declared the 45-percent measure “misdefines” how Medicare should consider its financial solution.

The report (www.cbpp.org) stated Medicare should be considered in terms of the total cost of the program rather than from which source a share of the program, such as Part B, is paid.

“This threshold is misguided,” Robert Greenstein, executive director of CBPP said in a statement published April 23 (http://www.cbpp.org/4-23-07health-stmt.htm).

“Medicare is supposed to be financed in significant part with general revenues.  That at least 45 percent of Medicare will be financed with general revenues is no more a problem than that 100 percent of defense, education, or most other federal programs are financed with general revenues.” Greenstein’s statement read.

CBPP suggested the only meaningful reform to solidify Medicare must come by unified actions that include not only finding greater funding for the program but reform within Medicare itself.

Physical therapy services represent only a fraction of the total Medicare Budget. In the first six months of 2002 physical therapy claims totaled only $528 million of the $228 billion.