In the wake of yet another proposed fee cut for Medicare physicians, the physician lobby is banking on a legislative proposal that seeks to eliminate the threat of future payment reductions.
Last week, the CMS in its proposed physician fee schedule for 2008 announced that payments to physicians would drop nearly 10%, a move that was expected but not welcomed by the physician community. The CMS in its announcement projected the drop would result in payments of $58.9 billion to 900,000 physicians and other healthcare professionals next year. The CMS also included changes that touch on information technology and physician self-referral (See chart).
The announcement came the same week as the start of the new Physician Quality Reporting Initiative, which allows doctors to boost their Medicare reimbursement by 1.5% for reporting certain quality measures. Physicians are not fully behind that option because the effort needed to comply may not be worth the payoff (May 28, p. 10).
And the CMS proposal may not be the last word on the issue of physician payment. Physician groups have been pleading with Congress to replace the method used to calculate physician payments under the Medicare program, the sustainable growth rate, or SGR, which is tied to the health of the economy. The SGR sets physician fees based on the extent to which actual spending aligns with specified targets. Because spending has exceeded the targets in recent years, the SGR since 2002 has called for cuts each year, most of which have been averted through congressional actions, resulting in either minimal increases or static payments to physicians.
A summary of the proposed rule said comments will be accepted until Aug. 31, and a final rule will be published later in the fall. The final rule will be effective for services on or after Jan. 1, 2008.
A 10% cut would likely hurt physicians across all types of payers, not just Medicare. Whenever we experience a cut in Medicare it also affects the reimbursement from Blue Cross Blue Shield and the other HMO insurance companies, as all their rates are based on Medicare, said Linda McGill, administrator of Western Communities Family Practice Associates in West Palm Beach, Fla., where Medicare patients make up 8% to 10% of the practice. Medicare cuts to reimbursement have had a domino effect, McGill said.
She isnt optimistic that Congress will achieve a permanent fix this year. At the present time I dont see much of value being done on Capitol Hill, she said.
Nevertheless, an attempt to create a longer-term, though not permanent, fix is in the works. In a meeting late last month, staff for the House Ways and Means and Energy and Commerce committees shared with physician organizations a draft proposal to halt the 10% cut from taking effect next year. The proposal would replace the cut with at least a 0.5% update in 2008 and 2009, repealing the SGR and replacing it with six separate expenditure targets such as primary-care and preventive services, imaging, anesthesia, other evaluation and management services, and major and minor procedures.
The Medical Group Management Association, one of the medical group participants at the meeting, is pleased that the document indicates increases for at least two years, and we will be requesting higher levels as the process continues, said Patrick Smith, senior vice president for government affairs with the MGMA.
The new proposed targets, like the SGR, would still be based on the nations gross domestic product but would be designed to be more closely aligned to physician services. Under the proposal, physicians would receive two years of positive updates, but beginning in 2010 and beyond, any area that exceeds its spending growth target would again be in line for a cut in payments from Medicare.
Authors of the proposal anticipate that
$54 billion (representing the debt accumulated to the program from averting cuts to physician payments over the past few years) could be recouped from physician payments starting in 2010, by being spread out among the six targets. Each service category has the responsibility to pay back its share of the debt, the draft proposal from the committees stated. The authors of the draft stressed that this would be an interim payment policy until a permanent solution is put into place.
The proposal would be part of a larger legislative package to reauthorize the State Childrens Health Insurance Program, which sunsets in the fall. While Senate lawmakers seem intent on approving a straight reauthorization bill, it has been anticipated that the House version would tack on language unrelated to SCHIP, such as an SGR fix. House aides would not speculate on when their version would be taken up by the respective committees.
The Medicare Payment Advisory Commission also has explored the idea of replacing the SGR with more targeted, distinct SGRs, too, except the commissions proposal would set targets in payment adjustments for specific geographic areas rather than specific care services. A MedPAC official wouldnt comment on the House proposal.
The American Medical Association has reported that payments will drop by more than 40% by 2015, unless the SGR is replaced. Today, Medicare pays doctors the same as it did in 2001. More than 60% of doctors say they will be forced to limit the number of new Medicare patients they can treat when the cut goes through, said AMA board member Cecil Wilson in a written statement.
CMS officials dont appear ready to budge on the issue though, and they see the Physician Quality Reporting Initiative as a short-term cushion to the payment drop and a possible avenue for more efficient reimbursement.