Case Overview, Medicare Payment Rate for Pap Screenings

This document provides background information and summarizes the debate over the Medicare payments rate Pap screenings. The links to the left will lead you to public documents that we have found.



          The issue pertains to the rate set by Medicare to reimburse pathologists and physicians for conducting screenings of Pap smears for the detection of cervical ailments, including cancer. The demand for an increase in Medicare's payment rate for the service was made on the basis of rising technology costs, dissatisfied and underpaid pathologists, and the projection that more reasonable rates of payment by Medicare would not only ensure the continued provision of the screening but also positively affect the rates paid by private insurance companies. Many congressional statements, and the route taken by the lobbying effort in gaining access to minority and women's caucuses, also suggest that this issue did have a place in the larger struggle for increased attention to women's health and reducing barriers for those most at risk and with least access to healthcare.

          At the beginning of the lobbying effort, the Medicare laboratory fee schedule provided $7.15 for every cytopathology smear, when the actual cost of the conventional Pap smear was in the range of $13 to $17. More technologically superior liquid-based Pap testing cost $28-$32 (ASCP Statement to the House Government Reform Committee, 10 June 1999, accessible at The Health Care Financing Administration (HCFA) holds the authority to make adjustments to, and increase, the payments for such tests on the clinical laboratory fee schedule. While recognizing that there was some obvious deficiency in the payment structure, HCFA chose to remain unconvinced of the specific need for adjustment due to lack of data that would allow precise determination of the shortfall (and hence of the subsequent requisite increase). With discussions on this front ongoing between HCFA and lobbyists primarily from various health-related groups, the latter sought to explore congressional avenues, hoping that HCFA might be more inclined to respond if they thought Congress would legislate a rate increase. Frustrated with the reluctance of HCFA, it was a member of the College of American Pathologists who contacted his Member of Congress to initiate legislation in Congress. The first move was made by Representative Neil Abercrombie (D-HI) and followed up by Senator Daniel Akaka (D-HI) who sponsored legislation for an increase in Medicare payments for Pap screenings in the 105th Congress. This attempt did not meet with success. Figuring that the movement of the bill would benefit from being attached to a broader Medicare vehicle, lobbyists recognized that the appropriations legislation could be a good vehicle. Obviously, having Democratic sponsors in Republican-led chambers was not the ideal situation to be in, especially since Abercrombie was not even on a relevant committee. The need was felt to reach out to Republicans not only for support, but energy. However, the furthest the demand for the payment increase could go in that session was inclusion in the report that accompanied the appropriations bill, which passed, hence affirming that some action should be taken by HCFA to increase Medicare payments.

          The bill was reintroduced by Representative Abercrombie in March 1999 (106th Congress) as the Investment in Women's Health Act [H.R. 976]. This time, the bill was co-sponsored by Representative Mary Bono (R-CA). Senator Akaka (D-HI) brought companion legislation to the Senate [S. 1034] in May 1999. H.R. 2930, a variant of these bills sponsored by Representative Jennifer Dunn (D-WA) in September 1999, asked for the reimbursement rate to be increased to $13. In November 1999, the House ruled in favor of compensating hospitals, nursing homes and other caregivers for the Medicare payment cuts under the Balanced Budget Act of 1997. This bill (the Medicare Balanced Budget Refinement Act of 1999) also provided for Medicare payments for Pap smears to rise to ensure access to the latest technology. The BBRA 1999 was to establish a minimum payment amount of $14.60 effective January 1, 2001 with updates to that amount for subsequent years. The issue remained a piece of the larger political battle of budget reform and healthcare policy that waged in the 106th Congress for another year, until it was finally resolved when the healthcare spending bill passed at the tail-end of the 106th Congress.



          The issue was bipartisan to the extent that while Democrats were the first movers, by the time of the 106th Congress the bills had Republican co-sponsors. Presented as the Investment in Women's Health Act 1999, this piece of legislation merited little resistance-compared to the debate around the BBA 1997 and spending reform with which it was contemporaneous-by virtue of its affirmative, ethical appeal to bipartisanship personified by men and women working across party lines. The two primary sponsors of the legislation each time around (i.e. in the 105th and 106th Congress) were Representative Abercrombie (D-HI) and Senator Akaka (D-HI), and co-sponsors included other Democrats such as Senator Patty Murray (D-WA) as well as Republicans such as Representative Mary Bono (R-CA), Senator Olympia Snowe (R-ME), and Senator Susan Collins (R-ME).

          The Congressional sponsors were supported by a coalition, People for Annual Pap Smears (PAPS), constituted by technologists, pathologists and physicians groups, and led by the College of American Pathologists. Other groups who were active in the struggle and deliberation with HCFA even prior to the issue being brought to the Congress include the American Medical Women's Association, the American Society of Clinical Pathologists, American Pathology Foundation, American Medical Association, National Federation of Nonprofits, National Cancer Institutes, and the National Institutes of Health. To repeat an earlier point, the list of endorsers exceeded the list of active lobbying groups, due to what can be deemed as division of labor on the healthcare and welfare policy front. Most significantly, the payment rate issue was not a priority for anyone but the pathologists.

          It follows, then, that while there were many supporters of the increase due to shared convictions about healthcare provision, the continual contention and tradeoffs over the state of the health budget were likely to result in a tension between priorities over how the fought-over pie of spending should be best dealt out. Therefore, at least lukewarm or passive opposition was not hard to find strewn within broader support. This lukewarm opposition basically wanted to know who would lose in the zero-sum game-hence finer priorities within larger agreements were bound to affect the outcome of the lobbying effort. Certainly the starker opponents were those who supported the Balanced Budget Act of 1997, did not want to disrupt the status quo, and who wanted to conserve and preserve the fiscal surplus. Much of the reluctance to outright support, not unlike that of HCFA itself, came through in demands for specificity where the advocates' data handicap was most critical. Even when convinced of the inequity, the question would always stop at the justification for the quantum of increase demanded, and instead of realizing that Medicare may be a desirable price-setter for the rest of the market, many of the opponents chose to argue for deference to the market. Finally, there were those who had a neutral stance on the issue.



          Early detection of cervical cancer can help lower its toll dramatically. The Pap screening is one of the most important and effective cancer-detection tests developed in the last fifty years Therefore, any positive steps taken to ensure the quality, and the provision, of Pap screenings to women go a long way in reducing death-rates associated with this particular kind of cancer. Beyond the fact that women are, by definition, the target of this disease, it is also true that women hailing from minorities and lower-income groups are at a higher risk. Thus, the chief argument used by supporters revolved around equity and access to care for women. They argue that women need this procedure, and the cost increase makes sense because it is needed to cover the cost of the procedure. As one lobbyist put it, "it is basically an equity issue, a concern about the adequacy of payment, and potentially its impact on care." Coverage and access would increase if the tests were to be made affordable to physicians by adjusting the reimbursement rate. According to proponents of the rate increase, if the payment rates were not adjusted to capture the actual costs, many pathologists would just lose their jobs because labs wouldn't be able to afford them and the related costs of the procedure.

          Arguments articulated in opposition to the increase were not found-and the silent "opponents," comprised of those who patiently observed the twists and turns in the lobbying effort, and basically awaited word to who would lose out (i.e. which program truncated) as Medicare increased the Pap screening payment rate. It was felt that within the entire slew of healthcare issues-with Medicare funding considered a zero-sum game in most cases-some or the other program would bear the brunt of the costs of Medicare's generosity on another avenue. The likely targets of the reduction were expected to be opposed to the increase in payments for Pap screenings.

          Enhanced technological expertise in the detection phase, diffusion effects from Medicare to private insurance companies in terms of coverage and payments, and guaranteed continuity of provision of the service are the central issues in the struggle for increased Medicare payment rates. With a reimbursement rate of $7.15 when the actual cost of a conventional Pap smear was between $13-$17 (or $28-$32 in the case of technologically superior tests)-the price including cytotechnologist salaries, overhead costs, quality control, laboratory supplies, and supplies given to healthcare providers who obtain the smear-it was evident that an improvement in the payment structure would have positive effects on all the cost components, in the public as well as the private sector. For instance, with advances in technology, increasing the Medicare reimbursement for Pap testing in order to bring it more in line with actual costs would help attract and retain professionals in the field. Also, it was argued that private reimbursement follows the lead of federal payment rates, and a correction at the Medicare end that would capture the true costs was bound to trickle-down to millions of women with employer-sponsored or individual insurance coverage.

          Comparison between the going reimbursement rates and the actual costs, however, was not enough to convince HCFA to use its authority to make adjustments in the Medicare fee structure, and the agency asked for more evidence. One advocate confessed to a lack of "scientific approach" on their part-while anecdotal evidence regarding inequity was there, they did not have the information nor had done the statistical homework to satisfy HCFA. It was not simply lack of data that was an impediment but the adequacy of the data that existed. For example, to make the case that minorities (due to economic as well as cultural inhibitions) and more generally economically-challenged women bear the brunt of the hazard of cervical cancer more than other groups which seemed logical and supported by enough experiential evidence, data specific to different races and cultures nevertheless needed to be gathered, which itself requires investment. "Our current data lumps different sub-populations together, potentially masking wide variations in cervical cancer rates. It is critical to understand these differences in order to target prevention and treatment initiatives appropriately." (U.S. Congressman Sherrod Brown (D-OH), Ranking Member, Commerce Subcommittee on Health and Environment. 16 March 1999, accessible at Inadequate capacity for research was thus cited as a big shortcoming by almost all those involved.

          The reluctance of HCFA to authorize the rate increase, and Congress's low preference for legislating on specific rate increases rendered Abercrombie's bill that carried a specific dollar amount of increase unusual and risky.

          Furthermore, given that Medicare reimbursements would directly provide for the elderly, especially less economically-advantaged elderly -two populations especially vulnerable to cervical cancer (older women are more likely to die of it due to diagnosis at later stages as compared to younger women who are more frequently diagnosed)-the beginning had to be made at the federal level for its positive reverberations to be felt elsewhere.



          The struggle to increase Medicare reimbursement for Pap screenings to more adequately reflect the actual costs of procedure began when HCFA was approached with a request to authorize an adjustment in the pay schedule. An issue that had thus far travelled a regulatory route was thrust into the legislative arena when Senator Abercrombie (D-HI) presented the issue to the 105th Congress. Initially not drawing path-breaking support, the bill attracted more bipartisan clout when re-introduced in the 106th Congress. In the interim, the coalition (People for Annual Pap Smears) was formed that tried not simply to get Republican support but to energize them into playing a visible role. In the words of one advocate, it wasn't a preferred option to have a Democrat, (male, non-minority) as the key mover in the House, especially one who was not even on any of the relevant committees. However, the lobbyists diversified and reached out across parties and to targets in multiple committees. These included the House Appropriations Committee, the House Ways and Means Committee, the House Commerce Committee, the House Government Reform Committee, the Senate Finance Committee, the Senate Special Committee on Aging, the Congressional Women's Caucus and the Congressional Black Caucus.


Lobbying Activities and Tactics

          With the initial resort to the Congress more a result of impatience at the lack of response from HCFA than a calculated strategic decision, the sponsoring of the bill in the 105th Congress did have more desirable results in terms of indirect pressure on HCFA itself, at the same time as it laid ground for a better-planned effort in the following Congress than the advocates had expected. Doubting its viability as an independent piece of legislation, the lobbyists worked to have its language included in the report accompanying the appropriations bill in the 105th Congress that stressed the salience of the issue and urged HCFA to address it.

          Not only did the proponents of the increase in Medicare reimbursement find themselves allied with all those groups chiselling away at the potential barriers to proper and wide-spread cervical cancer screenings, they also were situated within the camp opposing the healthcare cuts of the Balanced Budget Act of 1997. (It should be reiterated here that endorsement did not translate into active lobbying since there were differing priorities, with pathologists advocating a specified payment increase). On the heels of the Balanced Budget Act of 1997 (which was also incidentally the one that had invested the "inherent reasonableness authority" with HCFA which the latter was hesitant to execute to escalate the Medicare payment rate), much activity was underway in the Congress to pass the Balanced Budget Refinement Act of 1999 that would modify and compensate for some of the excessive and unprecedented impacts of BBA 1997. Focussing on building a bipartisan camp for the Investment in Women's Health Act presented in the House and Senate in March and May 1999 respectively, the coalition mainly constituted by medical professionals actively engaged in maximizing the support of women and minorities by laying out the stakes of the issue, as have been detailed in previous pages. In the forefront was the appeal to simple mathematics where underpayment and professional security of the service-providers was concerned. Accompanied emphasis was on was on maximising not only support but active involvement of each of the various party, gender and minority groups on the issues of inequity, women's health, and the protection of the foremost constituency of Medicare: the elderly and the disadvantaged. Attempts to include patient groups in what had so far been a predominantly professional effort because of its conventional regulatory focus which was now broadening were also made, but the complexion of the advocacy coalition did not change much and remained largely professional.

          With its initial victory in the House in November 1999, it took the act almost a year to clear the Senate. That success, combined with the budget agreement reached towards the end of the Clinton administration, increased the minimum payment for Pap screenings to a national minimum of $14.60 and vowed to expand access to Pap smears from once in three years to biannual tests. Internal and external research remains a huge shortcoming of many of the active advocate groups on this and similar issues, and the role of think-tanks and independent research institutes has been minimal to nothing.