Medical Device Daily Washington Editor

The sustainable growth rate (SGR) mechanism for controlling the increase in some parts of the Medicare budget has been the target of a tremendous amount of controversy, so much so that many doctors see SGR as a four-letter word. And, as promised, the fee schedule for 2008 included the 10% cuts in physician fees mandated by the SGR schedule.

But if history is any guide, backlash against the cuts is almost certainly going to prompt quick action on Capitol Hill to somehow replace them.

According to a statement by the Centers for Medicare & Medicaid Services, “Medicare estimates that it will pay approximately $58.9 billion to about 900,000 physicians and other healthcare professionals.”

The rule goes into effect Jan. 1, a common start date for CMS policies, which typically run to the calendar year rather than the federal fiscal year.

Needless to say, membership of the American Medical Association (Chicago) is not happy.

In a statement posted at the organization’s web site, AMA Chairman, Edward Langston, MD, said that a poll –the numbers polled unspecified — indicated that “60% of physicians say the cut will force them to limit the number of new Medicare patients they can treat.” He said that Congress could stop the cuts by “eliminating $54 billion in excess payments to insurance companies,” a reference to Medicare Part C managed care plans.

David Merritt, project director for healthcare-related programs at the Center for Health Transformation (Washington), told Medical Device Daily that Congress is very likely to act on this dilemma shortly.

“There will be widespread bipartisan support” of rolling back the cuts because “no one wants to feel the wrath from the provider community,” he said.

As for whether Congress will be able to cover the entire 10% difference, Merritt said: “They’ve closed it every year, so I expect they will find a way to close it again this year,” despite the fact that the sum is larger than in past years.

Asked if Congress would engage in horse trading for funding between Part B doctor fees and the Children’s Health Insurance Plan (CHIP), Merritt would neither rule it out nor commit to such a scenario, saying only that observers should “never underestimate their [Congress’s] ability to find money in other ways.”

As for whether Congress is likely to make up the shortfall by trimming money from the Part C budget, Merritt pointed out that the CHIP bill originally submitted by House Ways & Means chairman John Dingle (D-Michigan), would have cut $40 billion to $50 billion over 10 years from Part C, but resistance from members of both parties to cuts of that size from Part C make that an unlikely outcome. Consequently, Merritt said, “in the long term, they will still need to find money elsewhere.”

Part of the 2008 package is a series of incentives under the Physician Quality Reporting Initiative (PQRI), which would net a doctor’s office a bonus of as much as 1.5% by reporting a specific set of quality measures to CMS backed by a nest egg of $1.35 billion. The schedule also includes a substantial boost for anesthesiology work, to the tune of 32%, on the recommendation of the Relative Value Update Committee (RUC) of the American Medical Association (Washington) (Medical Device Daily, July 3).

Kerry Weems, acting CMS administrator, said in the statement that the update “encourages the use of electronic prescribing to improve the speed and accuracy of care to beneficiaries and extends payment incentives for quality measures.”

He also said that CMS “will continue to work with Congress and physician groups to identify payment methods that help improve the quality and efficiency of care in a way that is mindful to not increase costs to taxpayers, Medicare and its beneficiaries.”

The statement says that CMS modified a proposal to eliminate an exemption for computer-generated faxes as alternatives to electronic prescribing because of feedback that indicated a need to retain computer fax prescription transmissions. According to CMS, the only allowable use of electronic faxes will be for “instances of temporary/transient transmission failure and communication problems that would preclude” e-prescribing, giving providers additional time to install the appropriate software on their office IT systems.

CMS also will extend for another year payments for each office visit during which the doctor intravenously infuses immunoglobulin after the patient is admitted to a hospital.

Another increase in fees will accrue for “the work component of certain physician visits to patient’s homes.”

According to Weems, by paying physicians for “more to spend time talking to their patients about their health,” CMS hopes “to improve the health status of Medicare beneficiaries.”

The update also includes a refreshed geographic index to take into account more current data about geographic disparities in care utilization, which have been the subject of substantial comment by the Medicare Payment Advisory Commission (MedPAC) and others. CMS also pointed out that it “has no choice but to implement this negative update because it is mandated” by law.

CMS publishes HOPPS update

CMS also issued a final rule regarding the 2008 update to the hospital outpatient prospective payment system (HOPPS), as well as an update for payments to ambulatory surgical centers.

The Nov. 1 statement says that CMS expects to pay hospitals an average increase of 3.8% for outpatient services next calendar year. The agency stated that it has extended “the current packaging approach to include” a variety of services, including imaging services, diagnostic radiopharmaceuticals and contrast agents, and others. The statement indicated that CMS expects this scheme will result in “larger payment bundles that will provide hospitals with the flexibility to manage their resources efficiently.”

The rule also introduces several new composite ambulatory payment classification (APC) groups to pay for several types of services, including low-dose brachytherapy for prostate cancer, and cardiac electrophysiology evaluation and ablation services. The announcement stated further that CMS and patient liability for some device-dependent APCs will drop when manufacturers give the hospital a “substantial partial credit toward the cost of a replacement device.”