April 18, 2008

1. Congress Tries to Stop Physician Pay Cut

2. CMS Demands Higher Quality for Hospital Payment

1. Congress Tries to Stop Physician Pay Cut

Senate Finance Committee Chair Max Baucus (D-MO) is working on legislation to address the looming 10.6% Medicare physician pay cut scheduled to take effect July 1, 2008, as well as the additional 10.1% cut that would take place January 1, 2009. The annual process of trying to prevent the cut is once again proving difficult as pay-as-you-go principles put pressure on legislators to save money elsewhere in the Medicare program to account for any proposed increase in Medicare funding.

In a Medicare package he plans to introduce directly on the Senate floor by mid-May, Senator Baucus has stated he favors applying an 18-month fix to the Medicare payment system and possibly providing a 1.1% rate increase during that period. Additional priorities Senator Baucus has outlined for his proposed legislation include:

• Extra incentives to get health care providers to work in rural areas.
• An electronic prescribing provision that would provide incentives for physicians to use e-prescribing tools and electronic medical records.
• An expansion of the Physician Quality Reporting Initiative program.

According to the Congressional Budget Office, the 18-month freeze would cost approximately $8.1 billion over five years; a 1.1% rate increase would cost $8.7 billion over five years. In an April 11 meeting with several physician groups, Senator Baucus discussed strategies for saving money elsewhere in Medicare to support the freeze or increase. According to insiders, one possible area the group discussed might be cut is Medicare Advantage. However, the White House and several members of Congress have stated strong opposition to reductions in Medicare Advantage plans.

One major issue regarding Baucus’ proposed plan is that physician payments would face a 20% cut at the end of the freeze in 2010. If physicians received the 1.1% increase over 18 months, the cut in 2010 would be 21%. Such a cut would surely cause physicians to accept fewer Medicare patients. While Baucus has said he would not allow such a large payment cut in 2010, he has also said that a cut of some sort is necessary. When asked how physicians are reacting to this news, Baucus has said, “They understand that’s the reality.” However, a spokesperson from the American Medical Association, a physician group explicitly not invited to Senator Baucus’ April 11 meeting, said concerns remain about financing arrangements that may spare physicians pain now but promise a bigger cut later.

Another possible provision in Senator Baucus’ legislation could be an increase in payment rates for primary care physicians. Senator Baucus has been called “sympathetic” to the Medicare Payment Advisory Council’s (MedPAC’s) recommendation finalized last week that calls for a payment “bump” to primary care providers. MedPAC’s recommendation calls for a budget neutral increase. While there is speculation Senator Baucus may include language that calls for a bump in primary care payment rates, insiders at the April 11 meeting state that specialty group representatives balked at the idea that they might have to lose money to help increase payment rates for primary care under budget neutrality.

2. CMS Demands Higher Quality for Hospital Payment

The Centers for Medicare & Medicaid Services (CMS) proposed a regulation Monday, April 14, 2008, that would increase the demand on hospitals for data on the quality of inpatient care and toughen the financial penalties on facilities that fail to comply with new and existing quality measures. The rule proposed by CMS expands two initiatives that strengthen the tie between health care service payments and quality of care—the Hospital Quality Measure Reporting and the Hospital-Acquired Conditions (HAC) initiatives. CMS will accept comments on the proposed rule through June 13, 2008.

Under the quality measure program, CMS proposes an increase of 2.3% in inpatient payment rates for fiscal year (FY) 2009, beginning October 1, 2008. However, hospitals would only receive this increase if they report on the 30 current quality measures in 2008. The new proposal would require hospitals to report data on 73 quality measures—43 additional measures since last year—in FY 2009 to qualify for the full inflation update in FY 2010. Among the types of additions are reporting on hospital readmissions, stroke measures, and patient safety and inpatient quality indicators developed by the Agency for Healthcare Research and Quality.

Under the growing HAC initiative, beginning in FY 2009, Medicare will no longer pay hospitals for the increased costs of care that result when a patient is harmed by one of several “reasonably preventable” conditions that did not exist upon hospital admission. Among these conditions are air embolisms, catheter-associated urinary tact infections, and pressure ulcers. CMS also proposes expanding the list of conditions that must be reported if present when a patient is first admitted to the hospital. The conditions include Legionnaire’s disease, extreme blood sugar derangement, delirium, ventilator-associated pneumonia, and deep vein thrombosis.

In a CMS press release announcing the regulation, CMS Administrator Kerry Weems declared that “CMS is taking aggressive actions to ensure that beneficiaries get safe, high quality, and efficient care from their health care providers.” However, the CMS proposal has met some criticism. In an American Hospital Association (AHA) news release, AHA vice president for quality and patient safety Nancy Foster expressed disappointment that CMS has chosen to propose measures that are neither endorsed by the National Quality Forum nor adopted by the Hospital Quality Alliance.

CMS will accept comments on the proposed rule through June 13, 2008. The final rule, which will be issued on or before August 1, 2008, would apply to services provided to patients discharged at the start of FY 2009. For more information, please visit the CMS website.

The Alliance for Academic Internal Medicine—the nation’s largest academically focused specialty organization—consists of the Association of Professors of Medicine, the Association of Program Directors in Internal Medicine, the Association of Subspecialty Professors, the Clerkship Directors in Internal Medicine, and the Administrators of Internal Medicine.

Please contact AAIM Vice President for Policy Charles P. Clayton (cclayton@im.org), AAIM Policy Coordinator Nicole V. Baptista (nbaptista@im.org), or AAIM Policy Assistant Jessica L. O'Hara (johara@im.org) at (202) 861-9351 with questions or comments about this week’s Merlin.