Medical Device Daily Washington Editor
A subtext to the ongoing inside-the-Beltway debate concerning the proposed Medicare Part B doctor’s fee cuts is that of payments to Medicare Advantage (MA) plans.
One of the points that the American Medical Association (Washington) — as well as some members of Congress — has tried to make is that MA plans have not had to deal with the same budgetary scythe as Part B doctor fees and that the disparity creates an imbalance.
Into this soup goes another report from the Commonwealth Fund (New York) on the current status of MA plans.
The report notes that this status is based on “updated estimates ... based on final 2005 enrollment figures that were not available at the time” of the Commonwealth’s previous report. Whether the report will shape the current debate on Capitol Hill regarding the Part B cuts is nearly impossible to estimate, especially since the outcome is so much in doubt that many long-time observers are reluctant to forecast the result.
The CWF report reminds the reader that the Medicare Modernization Act of 2003 “sharply increased payments to private Medicare Advantage plans” and that as a consequence, “every plan in every county in the nation was paid more in 2005 than its enrollees would have been expected to cost if they had been enrolled in traditional fee-for-service Medicare.”
The authors of the report said that payments to MA plans “averaged 12.4% more than costs in traditional Medicare” last year, with the total difference in payment amounting to $5.2 billion, or $922 for each of the 5.2 million MA enrollees. When Congress hammered out the Balanced Budget Act (BBA) of 1997, the expectation was that enrollment in MA plans would rise to 27% of all beneficiaries, a figure provided by the Congressional Budget Office. However, the enrollment peaked at 16% in 1999 and 2000, and fell as low as 12% in 2002 and 2003. For 2005, the ratio of beneficiaries in MA plans stood at 13%. The exodus of plans following passage of the BBA reduced the numbers of plans available to beneficiaries in virtually all markets, and completely eliminated available plans in some rural markets.
The CWF report blames the increase on the use of a local-market rate benchmarking that by itself boosted MA plan payments by 8.1% and that combined with budget-neutral risk adjustments, the difference comes to 12.4% for 2005.
Disagreements persist, as always, and the industry group America’s Health Insurance Plans (AHIP; Washington) chimed in with its own view of events.
In a Nov. 30 press release, AHIP President/CEO Karen Ignagni said that the CWF report “makes inaccurate comparisons” between MA and fee-for-service (FFS) costs due to “flawed analyses” that over-estimate the difference in payments. She said that “the study does not consider the approximately $2.1 billion in savings generated” by MA plans and that CMS has determined that MA enrollees “are saving an average of $82 a month.” This is said to amount to a total savings for beneficiaries of more than $6.8 billion a year.
Mohit Ghose, vice president of public affairs at AHIP, told Medical Device Daily that AHIP’s position is that “the best value in the Medicare system” should be paramount in this debate. He added that “in five of seven quality measures, the MA plans were doing better” than fee for service outcomes.
Ghose said that the organization’s position is that “the Part B doc fix needs to go through, but we should not rob Peter to pay Paul.”
As for the prospects for the so-called “doc fix,” Ghose saw “some movement” on the issue, but described the debate as still heated. He declined to predict whether the 109th Congress would hash this out before adjourning.
GAO says CMS can ditch annual ASC pay review
There’s no alphabet soup like that cooked up in the nation’s capital, and a report released last week by the Government Accountability Office pounded home that point — and one other: Medicare payment for work done by ambulatory surgical centers (ASCs) should be pegged to the rates paid to hospitals for outpatient surgeries.
The co-administrators at the Centers for Medicare & Medicaid Services , Leslie Norwalk and Herb Kuhn, might be forgiven for gloating at the outcome. This was the approach CMS took to the question in its August update to ASC payments, which targeted ASC payments at 62% of the outpatient hospital payment.
Thanks to the Medicare Modernization Act, GAO was tasked with comparing the cost of doing business in ASCs and hospitals, and the just-released report included the recommendation that CMS “implement a system of procedures performed in ASCs based on the OPPS, taking into account the lower relative costs ... compared to hospital outpatient departments.”
The report noted that CMS “last revised the ASC payment rates in 1990,” based on 1986 data, but growth in ASC procedures in the interim has been robust. According to GAO, roughly 2,900 ASCs were in operation in 2000, but an additional 1,300 sprouted up in the four years that followed, a jump of almost 45%. In that same time frame, payments ballooned nearly 80%, from $1.4 billion to $2.5 billion.
Payments to ASCs for multiple procedures cover 100% of the most expensive, separately billable procedure and half the billable cost of any other procedures for each visit. With some exceptions, the same rubric applies to hospital outpatient procedure payments.
“For the top 20 procedures, we found many similarities in the additional services billed with procedures” in the two settings, the report noted, and the GAO employed a “relative weight scale” built with the help of CMS and several specialty societies. The net result, after a belabored explanation of the statistical tools employed, was that “the OPPS could be used as the basis for an ASC payment system, eliminating the need for ASC surveys and providing for an annual revision of the ASC payment groups.”
In a Dec. 1 press release, Craig Jeffries, executive director of the American Association of Ambulatory Surgical Centers (Johnson City, Tennessee), said that while it sees the link between the OPPS and ASC reimbursement as “a step in the right direction,” it nonetheless “presents a flawed vision of ASC costs.”
The association’s position is that because many of the procedures performed in the hospital outpatient setting are rarely or never handled by ASCs, GAO’s assertion that ASCs can do their work for 39% of the cost of hospitals is an “unreasonable assertion.”
“In their analysis that accounted for the procedures actually performed in an ASC (the weighted cost), GAO found that ASCs were performing procedures at 84% of a hospital’s cost for the same service.”
Jeffries told Medical Device Daily that “we strongly support the policy change” that led to CMS “moving away from a cost survey” and aligning the system to the OPPS. Jeffries did not see a problem in connection with the lack of year-to-year information from ASCs in setting payment rates.
As for the possibility that some centers will feel too strong a pinch to keep their doors open under the 62% payment rate, Jeffries said that “single specialty GI centers are most at risk of closing.”
The organization backs legislation that would set the payment rate at 75%, namely H.R. 4042 and S. 1844. Jeffries said that because prospects for passage are dim for the remainder of the 109th Congress, which has only this week to finish its business, AAASC members are not holding their breath.
“We hope to have sponsors reintroduce our legislation in 2007,” he said.