Physicians May Leave Medicare After Pay Cut of 4.3
Percent Announced
Other changes in program proposed by new rule
Aug. 2, 2005 - The Centers for Medicare & Medicaid
Services (CMS) expects to pay approximately $56.5 billion to 875,000
physicians and other health care professionals in 2006, but the payment
rates per service will be reduced by 4.3 percent. CMS says the reduction
is required by a statutory formula that takes into account substantial
growth in overall Medicare spending in 2004. This proposal is sure to
heighten fears of many senior citizens that their physicians may no
longer see Medicare patients.
The payment reduction shows the need for more
effective ways to pay physicians that help them improve quality and
avoid unnecessary costs, said CMS Administrator Mark B. McClellan,
M.D., Ph.D.
CMS is working with members of Congress, physician
organizations, and other healthcare stakeholders on ways to improve
physician payment without adding to overall Medicare costs, if at all
possible. These collaborations build on Medicares performance-based
payment demonstrations, value-based payment reforms implemented in the
private sector, and especially promising measures and reform ideas from
leading physician organizations, added McClellan.
"We're committed to the highest
quality care, but to make further quality
improvements Medicare payments must keep up with the
costs of providing that care," said John H.
Armstrong, a trustee of the American Medical
Association, in a statement issued last week.
"Without Congressional
intervention, Medicare payments to physicians will
be cut dramatically further widening the gap
between payments and costs and forcing physicians
to make difficult practice decisions.
"The AMA is so concerned about
these sharp cuts that we went to physicians and
asked them what changes they would have to make in
their practices if Medicare payments are cut by five
percent in 2006.
"Thirty-eight percent of
physicians told us exactly what we feared: we'll be
forced to decrease the number of new Medicare
patients we accept into our practices. These changes
would be just the tip of the iceberg, with the
majority of the cuts yet to come in the five years
following 2006."
The physician fee schedule specifies payment rates
to physicians and other providers for more than 7,000 health care
services and procedures, ranging from simple office visits to complex
surgery. The fee schedule is updated on an annual basis according to a
formula specified by statute.
The formula requires CMS to adjust the update up or
down depending on how actual expenditures compare to a target rate,
called the sustainable growth rate or SGR. The SGR in turn is calculated
based on medical inflation, the projected growth in the domestic
economy, projected growth in the number of beneficiaries in
fee-for-service Medicare, and changes in law or regulation.
If actual spending exceeds the target, or SGR, as
it did the past several years, then the law requires CMS to reduce the
update factor. The final rule will contain details of the methodology
for calculating the SGR.
In addition to updating the Medicare physician fee
schedule, the proposed rule will revise a number of other policies
affecting Medicare Part B payments.
The proposed rule, Medicare Physician Fee Schedule,
released yesterday would expand Medicare coverage of glaucoma screening;
expand access for rural beneficiaries enrolled in Medicare Advantage
plans to services of federally qualified health centers (FQHCs); reform
payment for multiple imaging procedures performed on a beneficiary at
one session; and revise payment for inhalation therapy and end stage
renal disease (ESRD) treatment.
The proposed rule provides for expanding the
screening glaucoma benefit to include Hispanic-Americans age 65 and
older because they are identified as an ethnic group at high risk for
the disease. Currently this benefit is limited to individuals with
diabetes, those with a family history of glaucoma, and African-Americans
age 50 and over, another group with a propensity to develop glaucoma.
Additionally, as required by the Medicare
Modernization Act (MMA), this proposed rule provides for supplemental
payments to federally qualified health centers (FQHCs) that contract
with Medicare Advantage (MA) plans. The payments are designed to cover
the difference, if any, between the payment received by the health
center for treating Medicare Advantage enrollees and the centers normal
Medicare payment rate. These supplemental payments will encourage
health centers to participate in the new MA program.
The proposed rule would revise payment for
separately billable drugs and biologicals furnished by ESRD facilities.
Under the proposal, the payment rate will be set at average sales price
(ASP) plus 6 percent, consistent with payment rates for most other drugs
under Medicare Part B. CMS is also proposing to change the drug add-on
adjustment which was established to account for the difference between
previous payments for separately billed drugs and biologicals and the
revised pricing that took effect January 1, 2005. Revisions to
geographic designations and wage index adjustments, with respect to ESRD
payment, are also included in the proposed rule.
CMS is seeking comment on an appropriate dispensing
fee amount for inhalation drugs provided using nebulizers, which are
covered by Medicare Part B.
In 2005, CMS implemented payment reforms to make
the payment for these drugs accurately reflect their prices; previously,
Medicare had been substantially overpaying for the drugs. With these
significant changes in drug payment rates, CMS established an interim
dispensing fee of $57 for a 30-day supply and $80 for a 90-day supply of
these inhalation drugs (the previous dispensing fee was $5 per month).
Now that the new drug payment system has been
implemented successfully, CMS intends to establish a dispensing fee
amount for 2006 that is adequate to cover the costs of those services
that appropriately fall within the scope of a dispensing fee. It is
likely that this fee amount will be lower than the current $57 per
month.
In addition, Medicare beneficiaries will also have
access to inhalation drugs dispensed through metered dose inhalers (MDIs)
when the new Medicare drug benefit begins in January. The proposed rule
seeks comments on a number of issues concerning the inhalation drug
dispensing fee, such as what services appropriately fall within the
scope of a dispensing fee and the cost of those services, information on
the quality of nebulizer drug services, and the impact of the
availability of coverage for MDI inhalation drugs. In addition, the
rule includes some proposed changes to the supplying fee for oral
Medicare Part B drugs.
Consistent with a recommendation to Congress by the
Medicare Payment Advisory Commission (MedPAC), CMS is proposing to
reduce payments for certain diagnostic imaging procedures to reflect
their limited additional costs when they are performed on contiguous
body parts in the same session with the patient. Because these changes
are made in a budget neutral manner, these lower payments for multiple
diagnostic imaging services will allow higher across-the-board payments
for other services under the fee schedule.
Other provisions in the proposed rule address:
Expanding the list of Medicare telehealth
services to include certain medical nutrition therapy services,
which will enable greater access to these services for beneficiaries
in rural areas.
Revising the methodology used to account for
the costs of running a physicians practice.
Refinements to the payment adjustments for the
malpractice costs associated with specific services.
Revising the list of health services for which
those physicians are prohibited from self-referring their patients
(the physician self-referral rules) to include diagnostic nuclear
medicine services and therapeutic nuclear medicine services.
Technical refinements to the ASP methodology.
CMS also discusses the 2005 demonstration measuring
quality of care for cancer patients undergoing chemotherapy, and seeks
input on the merits of the program and opportunities to evolve the
program in order to not only better capture data on the clinical care of
patients with cancer, but also to provide support for improvement in the
provision of that care.
The proposed rule will be published in the August
8, 2005 Federal Register. CMS will accept comments on the proposals
until September 30, and publish a final rule later this year.
