Glenn Hackbarth, the chairman of the Medicare Payment Advisory Commission, had some good news and some bad news in his written testimony to the health subcommittee of the House Ways and Means Committee. One of the parties that might be relieved with the report is the primary physician community, about whom Hackbarth's report states "most indicators of payment adequacy are positive and stable," which indicates that access is not hurting and "by most measures, better than that reported by privately insured" beneficiaries. MedPAC states a preference for a physician fee update of 1.1% for doctors under Part B fee-for-service (FFS).

Left unmentioned during the session was the sustainable growth rate mechanism that would drop physician payments under Part B by more than 10% this year, were it enforced. The subject came up only obliquely as the focus was primarily on hospitals and Part A.

The Part B imaging cash cow, however, may be running out of milk. Hackbarth's paper says that CMS is using a rubric for calculating facility utilization rates that may be outdated, noting that the relative value unit calculation "for advanced imaging services assumes that imaging machines are operated 25 hours per week or 50% of" the typical work week, an assumption "that has led to higher payments for these services" and "an incentive to use them as frequently as possible."

MedPAC recommended that CMS assume that imaging equipment is used an average of 45 hours a week, which would be 90% of the normal operating hours that most such clinics are open for business. This would apply to "all diagnostic imaging machines that cost at least $1 million," but MedPAC is of the view that less expensive equipment eventually be held to the same standard.

As for ambulatory surgical centers, Hackbarth's written testimony indicates that MedPAC sees at least 90% of them as "having at least one physician owner" and recommended a payment update of 0.6% next year. Part of the rationale here is that CMS boosted the number of procedures that ASCs can provide by 32% last year.

Home health services, the document states, "continue to be paid significantly more than cost, with average margins of 16.6%, leading to a recommendation that "Congress should eliminate the market basket increases for 2010" and adjust reimbursement codes "so that payments in 2010 are reduced by 5.5% from 2009 levels."

— Mark McCarty. Washington Editor

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