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AHA warns on impact of rate cuts for hospital-based docs


By Rich Daly
Posted: November 29, 2012 - 7:00 pm ET
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Congress is focused on using a $7 billion reduction in Medicare evaluation and management payments for hospitals as a way to help pay for delaying a looming physician pay cut, according to hospital officials and advocates.

The long-discussed reduction in evaluation and management rates for hospital-based clinicians to the level paid to office-based physicians has gained traction with members of Congress as a way to help offset the estimated $25.2 billion cost of a one-year patch for the sustainable growth-rate formula.

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"The ones that you keep hearing a lot about are the ones you worry about," Erik Rasmussen, senior director of legislative affairs for the American Hospital Association, said about the evaluation cuts.

The country's largest hospital group brought about 150 executives to Capitol Hill on Thursday to warn lawmakers about the impact on hospitals of the proposed evaluation and management cuts, among other cuts.

"There is no question that we will have to reduce the number of physicians we employ," Rebecca Ryder, president and CEO of Franklin Memorial Hospital, Farmington, Maine, said about the result of the cut that would cost about $1.8 million for her facility. That would likely reduce the number of physicians in the area of the hospital because most Maine physicians are hospital-based, she said.

The evaluation and management cut got its highest profile boost when the Medicare Payment Advisory Commission included it among its annual recommendations sent to Congress. MedPAC members said the change was needed to address the rising costs of such visits to Medicare as hospitals hire a growing number of private-practice physicians, who then perform more such services in hospital settings. The change also was described as the first in series of payment modifications that would equalize Medicare fees for services provided by clinicians in different settings.

Hospital officials said they expect their costs from the reduced payment to exceed government estimates because they do not capture the extra costs of hospital outpatient departments.

Also, the AHA estimated that the average 2.8% Medicare payment cut that would result from such a cut would grow to 5.8% for teaching hospitals and 4.9% for urban public hospitals.


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