Going into the final days of the 109th Congress, the key issue facing all physicians was the scheduled 5 percent cut in Medicare reimbursement. Although a long-term permanent solution for fixing the flawed sustainable growth rate formula—on which physicians’ Medicare reimbursement is in part based—remained elusive, there was widespread, bipartisan support to prevent the cut and a corresponding sense of urgency that this needed to be accomplished before Congress adjourned for the year. Unfortunately, while legislation to prevent the pay cut did pass, physicians were forced to swallow a number of bitter pills in the form of several new Medicare policies that will negatively impact neurosurgeons.
Passing by a margin of 79 to 9 in the Senate and 367 to 45 in the House, H.R. 6111, the Tax Relief and Health Care Act of 2006, freezes Medicare physician payments at 2006 levels. The bill also prevents additional cuts (particularly for physicians living in rural areas) due to changes in the geographic practice cost index. Lastly, the legislation includes an additional 1.5 percent bonus payment for those physicians who report certain quality measures between July 1 and Dec. 31, 2007, although these bonus payments will not be paid until 2008.
Although the legislation freezes the conversion factor at 2006 levels, other changes to the Medicare fee schedule implemented by the Centers for Medicare and Medicaid Services will go forward, causing reduced fees for many neurosurgical procedures. While the magnitude of these cuts will depend on individual neurosurgical practice and case mix, on average neurosurgeons will be facing a 3 percent Medicare payment cut in 2007: one percent is attributed to changes from the statutory five-year review of work relative values, 1 percent is due to changes to practice expense values, and 1 percent is due to statutory reductions in reimbursement for imaging services. While it may be of little comfort, previous iterations of the legislation and CMS policies could have produced a cut for neurosurgery in the 8 percent to 12 percent range.
The bill includes $1.35 billion for the Physician Assistance and Quality Initiative Fund. While Members of Congress indicated that this fund could be used to reduce the 2008 physician payment cut, the statute does not require that the funds be used in such a manner. Rather, the statute indicates that the Secretary of Health and Human Services may use the funds for an adjustment to the conversion factor for 2008 as well as for quality improvement activities. Thus, given the Bush administration’s current commitment to implementing quality reporting for all physicians, it is highly likely that these funds will be used primarily to create a larger and more expansive quality reporting program.
Why Neurosurgery Didn’t Support the Tax Relief and Health Care
Act of 2006
Despite being pleased that Congress stopped the 5 percent pay cut for 2007,
the AANS and CNS did not support this legislation because:
- the way in which the payment freeze is financed is extremely problematic and will cause physicians to be in an even deeper hole next year;
- the bill creates a new fraud and abuse program; and
- the new “quality” reporting system is unworkable, overly burdensome and inadequately funded.
Flawed Financing Structure The bill includes a budgetary gimmick that will lead to a steeper Medicare physician payment cut in 2008 and beyond. While Congress shifted money from the Medicare managed care stabilization fund to pay for the freeze in 2007, it did not change the underlying payment formula. As a result, the sustainable growth rate formula is still in place, and the cumulative nature of the SGR formula creates steeper cuts in future years than the already anticipated annual 5 percent cuts. In fact, the Congressional Budget Office recently analyzed the legislation and estimated that physicians are now facing at least a 10 percent cut in 2008.
New RAC “Bounty Hunter” Program Congress expanded the recovery audit contractor program, currently a demonstration program operating in California, Florida and New York, to all 50 states. Under the RAC program, the CMS works with special contractors who are authorized to audit physician practices in search of improper Medicare payments that may not have been detected through the existing fraud and abuse programs. These contractors essentially are bounty hunters who are paid a percentage of any overpayments they collect. A major complaint among physicians is that these contractors are disruptive to their practice and do not educate the practice regarding their common billing errors. They simply collect the “overpayments” and disappear.
Burdensome “Quality” Program The legislation is structured in a way that creates a burdensome new quality reporting program that may do little to actually improve quality. Initially, the CMS is required to build on the existing Physician Voluntary Reporting Program, which was launched in 2006 as an opportunity to test data collection and reporting methods before tying Medicare reimbursement to a physician quality reporting program. Starting in July 2007, physicians can qualify for the 1.5 percent bonus payments if they report to the CMS on at least three of the program’s quality measures for at least 80 percent of the cases in which the measures apply. The bonus payment will be a lump sum payment applied to all Medicare claims for the six-month period if the provider’s participation qualifies for the bonus payment. According to the Congressional Budget Office, approximately $300 million will be available in the bonus pool in 2007, although physicians who qualify for this program will not receive the bonus payments until sometime in 2008. The CMS has not yet clarified many of the rules involved in this new program, and a great deal of uncertainty about how it will operate remains. Several measures, including antibiotic and venous thromboembolism prophylaxis, are applicable to neurosurgery.
In 2008, the CMS has broad authority to implement a quality reporting program that could potentially morph into mandatory pay for performance. Although the legislation states that the CMS will select measures that have been developed under a consensus-based process and adopted or endorsed by a consensus organization, the AANS and CNS are concerned that this language is too vague and gives the CMS free reign over the selection of measures without appropriate oversight, direction and input from physicians.
Charting a Course for Fixing the Medicare Reimbursement Problem
The AANS and CNS, along with others in organized medicine, will be implementing
an aggressive advocacy effort aimed at educating the new Congress about the
problems with the Medicare physician payment system, as well as our serious
and ongoing concerns about the new quality reporting program and pay for performance.
Part of this strategy will be an immediate effort to repeal (or make significant
changes to) the recently passed legislation, particularly the provisions related
to the quality program. Of course, the focus of significant attention will
be on averting the pending 10 percent payment cut in 2008 by repealing the
current SGR formula and replacing it with a more sustainable reimbursement
system. The Medicare Payment Advisory Commission released a report to Congress
in March that outlines the problems with the currently broken Medicare physician
payment system and recommends a number of potential options for reform, including
preventing further cuts in 2008.
Given thehigh costs associated with both of these efforts—over $20 billion to prevent the 2008 pay cut and over $200 billion to repeal the SGR—medicine faces a tough, up-hill battle. To complicate an already daunting task, the new “pay-go” budget rules that the Democrats have implemented require any additional federal spending to be offset by either increased taxes or decreases in spending.
Physicians will need to play an active part in the political process to realistically have any hope of success. The AANS and CNS will be calling on all neurosurgeons to contact their legislators throughout the year. Please respond to these “Calls to Action” so policymakers hear the voices of neurosurgeons and their patients from all parts of the country, throughout the year. Your involvement is imperative.
Lori Shoaf, JD, [email protected] or (202) 628-2072, is senior manager of legislative affairs in the AANS/CNS Washington office.
For More Information
- Detailed summary of the Tax Reform and Health Care Act of 2006 legislation,
https://www.aans.org/legislative/aans/SummaryandLegislation2006.pdf - Recovery Audit Contractor Demonstration Program, https://www.cms.hhs.gov/RAC/
- Comprehensive list of quality measures applicable to neurosurgical practice, https://www.aans.org/legislative/aans/Neurosurgical QualityMeasures.pdf
- CMS Physician Quality Reporting Initiative, https://www.cms.hhs.gov/PQRI/40_TransitionFromPVRP.asp.