AMA Backs GOP Medicare Plan : Reform: Support comes after House Republican leaders vow to give doctors billions of dollars in relief. Group’s endorsement is seen as crucial to gaining public acceptance.

WASHINGTON — The American Medical Assn. gave a vigorous and unexpected boost to prospects for Medicare reform on Tuesday, endorsing the House Republican plan after GOP leaders promised to reduce the financial impact on doctors by billions of dollars.

The AMA will “work very hard to make sure” the nation’s doctors are aware of the GOP plan and will “encourage them to inform their patients,” AMA President Dr. Lonnie Bristow said at a news conference in the office of House Speaker Newt Gingrich (R-Ga.) Tuesday night.

The AMA’s endorsement drew swift criticism from the White House and a key congressional Democrat. But it greatly strengthened the hands of Gingrich and other GOP leaders battling to win approval for their plans to trim $270 billion from Medicare outlays over the next seven years. The opposition of the organization, which represents 300,000 physicians nationwide, to the Clinton Administration’s health care reform effort last year was a leading factor in its demise.

Under the agreement with House leaders, AMA general counsel Kirk Johnson said doctors will get billions of dollars in relief, meaning their reimbursements won’t be cut as much as called for previously under the plan--$26 billion over seven years. AMA officials expect the final savings will be closer to the Senate figure of about $22 billion.

The plan already had other elements the AMA embraced, including limits on medical malpractice suits and permission for doctors to form their own health care networks and charge unrestricted fees.

Gingrich refused to discuss specific figures, saying only that the doctors received a commitment that the reimbursement schedule--the system of payments by Medicare to health care providers--would be “equitable.”

A White House official said late Tuesday it is ironic that the AMA endorsement came “the same day that House Republicans defeated the Democratic amendment to ensure balanced billing protection for beneficiaries. . . . “

Balanced billing refers to limits on what doctors can charge beyond the Medicare fee schedule for office visits, examinations and tests and procedures. Doctors cannot charge more than 15% above the Medicare system now. The GOP proposal contains no limits on what doctors can charge when they organize their own health networks, as the Republican plan would permit.

The AMA’s support is thought to be crucial to gaining public acceptance of the reforms. For Medicare’s 37 million beneficiaries, there is no better source of information on health issues than their doctors, Gingrich said.

“The people my mother trusts in Harrisburg, Pa.,” her doctors, will present the information about Medicare reform in a calm way, he said. The physicians will say “here are the facts, we don’t need any propaganda,” Gingrich said, asserting that the backing of doctors will offset any Democratic attacks on the plan.

The House plan already had advantages for doctors that exceeded those in the Senate version. The House legislation called for changes in the antitrust laws to permit doctors and hospitals to work together to create health care networks. They could fashion health maintenance organizations and other networks, bypassing the insurance companies or other corporate enterprises that operate most managed care systems.

And the House GOP leaders’ bill also included a cap of $250,000 for pain and suffering awards--payments for non-economic damages--in medical malpractice cases. Punitive damages would be limited to $250,000, or three times the amount of the economic loss, whichever is larger. The Senate bill, by contrast, did not deal with malpractice changes.

AMA officials have met more than six times with Republican leaders to discuss the emerging legislation.

The deciding factor in the endorsement was the promise that the doctors won’t be hit as hard in the pocketbook as originally proposed in the Medicare reform effort.

The leading goal for the GOP is $270 billion to be saved by slowing the growth of Medicare outlays from the current level of 10% a year to a rate of 6.5% annually. Most savings are to come from reductions in the rates of payment to hospitals, doctors, laboratories, home health agencies and other health care providers. If the doctors’ cutbacks are $3 billion or $4 billion less, the money must come from somewhere else.

A top Gingrich aide insisted it would not come from hospitals or from the 37 million Medicare beneficiaries, but didn’t indicate what would provide the additional savings. The GOP plan already anticipates large-scale savings as millions of people move from the traditional fee-for-service system into HMOs and other health care networks. The Republicans might increase their optimistic expectations of money to be saved in this way.

AMA leaders emphasized that the GOP bill would be good for patients by expanding access to a broader range of health care systems. Seniors will get “a wider array of choices,” Dr. Daniel Johnson, the AMA president-elect, said at the news conference.

Gingrich and the other Republican leaders believe the AMA’s backing will help offset the opposition being mobilized against their plan by the American Assn. of Retired Persons, the largest power in the senior lobby with 31 million members. The AARP, after a long period of relative neutrality, is beginning a campaign against the effort to trim future outlays by $270 billion.

The number is too large and could force seniors to pay large additional sums out of their own pockets for Medicare benefits, according to the AARP. The organization is arguing that much smaller numbers, such as the $124 billion proposed by President Clinton, would be adequate to assure the solvency of Medicare. Its hospital trust fund will run out of money in 2002--the President’s plan would extend solvency until 2006.

The Republicans say their plan is more realistic because it would keep the hospital trust fund in the black until 2011, when the massive Baby Boom generation becomes eligible for Medicare benefits. (The program covers those over 65 and the disabled of all ages.)

The AMA’s announcement came as a solid and disciplined Republican majority brushed aside Democratic amendments to the legislation in the House Ways and Means Committee, which continued working late into the night heading toward a deadline of midnight tonight for approval of the full bill.

One such amendment would have given consumers expanded rights to drop out of HMOs, or to receive protection against higher rates. It would “give consumers peace of mind,” argued its author, Rep. Pete Stark (D-Hayward).

But arguing against the amendment, Rep. Sam Johnson (R-Tex.) said: “This is America, for goodness sakes; we’re not government-driven, we’re not bureaucracy-driven.” The proposal was defeated, 22 to 13, on a straight party-line vote.

At the Ways and Means session, Stark denounced the AMA-Republican agreement in personal and angry terms rarely heard in committee hearings.

“It is the lowest, most despicable thing I have ever heard . . . selling votes while you stick it to the poor and help the rich doctors,” said Stark, the ranking member of the health subcommittee.

“The Speaker cut a deal, one more example of how you sell out to the rich,” Stark said. He contrasted the GOP deal with the doctors with Republican votes against guaranteeing that Medicare patients regularly get tested for colon and breast cancer.

“There are not words to describe the despicable behavior of the Speaker” and other Republican leaders at the meeting in Gingrich’s office, Stark said.

One of those leaders, Rep. Bill Thomas (R-Bakersfield), immediately challenged Stark, saying doctors were attracted to the Republican plan by the opportunity it would give them to set up their own health care networks. Representations of a multibillion-dollar deal to win the AMA’s support were “absolutely false,” he said.

Thomas, chairman of the health subcommittee and a leading author of the GOP plan, said Stark owes “everyone he slandered an abject apology.”

Also meeting late into the night were members of the House Commerce Committee, which is considering the same legislation.

Members spent hours making speeches and posing questions to the panel’s GOP staff, largely to score political points, either for or against the proposal.

As they have been doing for months now, Republicans and Democrats argued over whether the GOP’s $245-billion tax cut proposal is to be financed by the $270 billion in Medicare spending reductions over the next seven years.

Democrats also attacked a GOP plan to provide all consumers, including Medicare beneficiaries, with tax-exempt medical savings accounts. The Congressional Budget Office has said that the device would cost $4.2 billion by the year 2002.