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Medicare Cuts Physician Pay 4.4 Percent, Still
Expects to Pay $57.6 Billion More
Nov. 2, 2005 – Physicians will receive a pay cut of
4.4 percent from Medicare in 2006, although the Centers for Medicare &
Medicaid Services (CMS) says they still expect to pay an additional
$57.6 billion to 875,000 physicians and other health care professionals
in 2006, according to a final rule released today that updates the
Medicare Physician Fee Schedule.
The final rule also expands Medicare coverage of
glaucoma screening; expands access for rural beneficiaries enrolled in
Medicare Advantage plans to services of federally qualified health
centers (FQHCs); adopts a modified approach to reforming payment for
multiple imaging procedures performed on a beneficiary at one session;
and revises payment for inhalation therapy and end stage renal disease (ESRD)
treatment.
The final rule indicates that, based on the update
formula, payment rates per service for physicians’ services will be
reduced by 4.4 percent for 2006, the announcement stated.
The American Medical Association has campaigned
vigorously against these cuts they knew were coming. Some doctors have
said they will discontinue serving Medicare patients if fees are cut.
There are proposals developing in Congress that would reverse this rule
and give a pay increase to doctors. The Senate Finance Committee agreed
last week to give doctors an increase of $10.8 billion over five years,
but it has a long way to go before becoming law.
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“The existing law calls for a decrease in payment
rates for physicians in response to continued rapid increases in use of
services and spending growth, and Medicare does not have the authority
to change this,” said CMS Administrator Mark B. McClellan, M.D., Ph.D.
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CMS Does Say Doctors Can Save on
Part B Drugs in 2006 |
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In a separate announcement,
CMS said physicians who administer certain drugs – including
oncology drugs ‑ in their offices to Medicare beneficiaries will
have the option of obtaining many of these drugs under a new
competitive acquisition program (CAP) starting on July 1, 2006.
The CAP applies only to certain drugs covered under Medicare
Part B which are administered in the physician’s office. It does
not apply to drugs included in the new Medicare prescription
drug benefit (Medicare Part D).
The CAP, which was mandated
by the Medicare Modernization Act of 2003 (MMA) is a voluntary
program that offers physicians an option to acquire drugs from
vendors who are selected in a competitive bidding process.
The vendors would then be
responsible for billing the program and collecting any
applicable deductible and coinsurance from beneficiaries for
drugs included in the CAP. Physicians who choose to participate
in the CAP will continue to be paid for the costs of
administering the drugs. This program could save physicians
time and paperwork and, in the long term, could lower drug costs
for beneficiaries and the Medicare program. |
“The current system is not sustainable, and the
payment reduction offers further proof that we must move to a payment
system that ensures adequate payments to physicians, but also supports
high quality and efficient health care services. We want to continue to
work with Congress toward a payment system that is more sustainable. In
this rule, we continue to refine payment rates to reflect current
medical practice, while doing all we can under current law to support
physicians’ efforts to provide greater quality and efficiency of care
for Medicare beneficiaries.”
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 that takes into account the rate of growth
in overall Medicare spending for physicians’ services in recent years.
In addition to updating the Medicare physician fee
schedule, the final rule revises a number of other policies affecting
Medicare Part B services.
The final rule extends the glaucoma screening
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, who
are another group with a propensity to develop glaucoma.
Additionally, as required by the Medicare
Modernization Act (MMA), the final rule provides for supplemental
payments to federally qualified health centers (FQHCs) that contract
with Medicare Advantage (MA) plans. The payments are designed to
equalize the payments received by the health center for treating
Medicare Advantage enrollees with the center’s payment rate for
beneficiaries in the traditional fee-for-service program. These
supplemental payments will encourage health centers to participate in
the new MA program.
The rule makes several changes to Medicare payment
for separately billable drugs and biologicals furnished by ESRD
facilities. The cumulative impact of these changes will be a 1.2
percent increase in payment per treatment. Under the new methodology,
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. This approach will apply for all separately billed
drugs in both independent and hospital based facilities. At the same
time, the rule increases the drug add-on adjustment to the composite
rate. This adjustment was established to offset payment cuts that
occurred when the payment for drugs and biologicals was reduced as a
result of the ASP plus 6 percent methodology. The rule also revises
geographic designations and wage index adjustments with respect to ESRD
payment, but provides for a four-year transition.
In response to comments on the proposed rule, the
final rule revises in several ways the proposal 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. Specifically, CMS will not apply this
reduction to transvaginal ultrasound and ultrasound of the breasts,
pending further study. In addition, the 50 percent payment reduction to
procedures after the first procedure will be phased in over two years,
so that the reduction in 2006 will be 25 percent, and 50 percent in
2007. Finally, the rule will apply the budget neutrality adjustment to
the practice expense component of the services only.
In response to comments expressing concern about
beneficiary access to intravenous immune globulin (IVIG), CMS is
establishing a temporary add-on payment to cover the additional
preadministration-related services required to locate and acquire
adequate IVIG product and prepare for an infusion of IVIG during this
current period of market instability. CMS has determined that the
pricing for IVIG is accurate, and that there is no overall product
shortage. However, in the face of such factors as increasing IVIG
demand and manufacturer allocation of many formulations, physician
office staff has to expend extra resources on locating and obtaining
appropriate IVIG products and scheduling patient infusions.
For calendar year 2006 only, physicians and
hospitals will be permitted to bill this add-on code to compensate for
the administrative burdens associated with IVIG administration during
this time of some volatility in IVIG product availability. During the
upcoming year, CMS and other agencies in the Department of Health and
Human Services intend to work with the IVIG patient community, product
manufacturers, distributors, physicians and hospitals to develop a
common understanding of the evolving IVIG marketplace, assure continued
collection of accurate ASP data, and focus attention on the medical
necessity of the utilization of IVIG. We anticipate that these steps and
other ongoing corrections in the marketplace will help to ensure that
supply volatility stabilizes in the next year.
Building on the CMS experience in 2005 with a
demonstration project measuring quality of care for cancer patients
undergoing chemotherapy, CMS is also establishing a new cancer quality
demonstration that focuses on treatment provided to beneficiaries for
any of 13 cancers listed as a primary diagnosis. This demonstration,
which will be conducted throughout calendar year 2006, will use the CMS
billing system to generate information on coordination of care,
treatment design, and patient monitoring.
The final rule modifies Medicare payment for a
dispensing fee for inhalation therapy drugs provided using nebulizers,
which are covered by Medicare Part B. In 2005, CMS established an
interim dispensing fee of $57 for a 30-day supply and $80 for a 90-day
supply of these inhalation drugs. On further review of the available
information and comments, CMS has concluded that the industry cost data
on which the 2005 dispensing fee was based includes care management
activities (such as in-home visits, patient education, caregiver
training, and care coordination) that do not fall within the scope of a
dispensing fee, and that do not have a Medicare benefit category.
Furthermore, a September 2005 OIG report found little evidence that such
care management services are widely provided to beneficiaries in actual
practice. Therefore, for 2006, CMS is establishing a dispensing fee
of $57 for a 30-day prescription for the first time a Medicare
beneficiary uses inhalation drugs and a $33 fee for other months. In
addition, Medicare will pay a 90-day dispensing fee of $66.
CMS is also developing a demonstration program for
care management and care coordination for users of inhalation therapy,
with the involvement of physicians, product suppliers, and other health
professionals, in order to determine whether such services have a
positive impact on outcomes and reduce overall Medicare spending. This
demonstration will focus on obtaining the most effective care for
Medicare beneficiaries with relatively severe or complex respiratory
conditions, including beneficiaries who need both nebulizer treatments
and drugs dispensed through metered dose inhalers (MDIs) that will now
be covered as part of the new Medicare drug benefit.
The final rule revises the definitions of two
categories of designated health services (DHS) subject to the physician
self-referral ban to include diagnostic and therapeutic nuclear medicine
services and supplies. Under the physician self-referral statute and
regulations, a physician is prohibited from making referrals for DHS to
an entity with which he or she (or an immediate family member) has a
financial relationship, unless an exception applies. CMS recognizes
that the inclusion of nuclear medicine as DHS may have an impact on some
current arrangements under which patients are receiving medical care,
and that some financial arrangements may have to be restructured.
Therefore, CMS is delaying the effective date for this regulatory change
until January 1, 2007.
Other provisions in the final rule include:
● 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.
● Discussing the methodology used by Medicare to determine the costs of
running a physician’s practice, which together with work and malpractice
expense, form the basis for setting the payment rates for the individual
physician services included in the Medicare Physician Fee Schedule.
● Changing the supplying fee for Medicare Part B immunosuppressive,
oral anticancer and oral anti-emetic drugs
The final rule will be effective for services
provided on or after January 1, 2006.
NOTE: More information can be found on the CMS
website at:
www.cms.hhs.gov/physicians/default.asp?
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