AMA sues HHS secretary for failure to correct errors

The American Medical Association, Chicago, filed a federal lawsuit on Dec. 2, 1999, charging Donna E. Shalala, secretary of the U.S. Department of Health and Human Services, with failure to exert her authority and correct errors in the system used by Medicare to pay physicians for care provided to the nation's elderly.

The AMA's main concern is how the sustainable growth rate, a critical component in the methodology used by the Health Care Financing Administration to adjust the annual update of payments for physician services under Medicare, was calculated in 1998 and 1999.

The AMA maintains that, by continuing to use projections instead of actual values, HCFA underestimated growth in Medicare spending. HCFA's failure to correct the errors, the AMA contends, resulted in an unlawful fiscal burden for physicians estimated at $3 billion.

"Physicians have faced years of undercompensation without ever abandoning Medicare patients," said Thomas Reardon, president of the AMA. "HCFA's ongoing refusal to use actual values in calculating the sustained growth rate is the equivalent of asking physicians to care for approximately one million Medicare patients annually without compensation."

Through 1999, the AMA worked with Congress to reach a bipartisan agreement that would eliminate problems with the sustained growth rate system in the future. The AMA said it supported the inclusion of improvements that were included in 1999's Balanced Budget Refinement Act, but said that steps must be taken to alleviate the burden resulting from HFCA's refusal to correct projection errors.

HCFA and HHS could not be reached for comment. PR