Medicare physician payment: What happened, why and whats ahead

[CAL/AAEM News Service]

Medicare physician payment: What happened, why and what’s ahead next year 

Source: The American Medical Association ( http://www.ama-assn.org )
Date: December 21, 2007


On Dec. 19, Congress passed legislation that would replace a scheduled 10.1 percent cut
in 2008 Medicare physician payments with a 0.5 percent increase through June 30, 2008. 

The AMA led a $3 million grassroots campaign to avert the scheduled 10.1 percent cut in
Medicare physician payment. As a result, Congress increased spending for Medicare
physician payments by 3.1 billion. Aggressive AMA lobbying and advertising generated more
than 50,000 phone calls and 500,000 contacts by physicians and patients to Congress. The
campaign also included 8,200 targeted television commercials; 6 million Internet
impressions; 13 AMA-AARP op-ed pieces placed in key states; six published letters to the
editor, including two in the Wall Street Journal; and an earned-media campaign that
resulted in 267 million media impressions, including a satellite media tour that reached
15 million people and a radio news release that reached 82 million.

The AMA is disappointed in the failure of Congress to provide—at minimum—a two-year
payment update that is paid for and that creates a pathway for the long-term replacement
of the flawed payment formula. The AMA will work with state and specialty medical
societies to execute strategies next year that will achieve this goal. 

Key elements of 2007 Medicare-SCHIP package
•    Replaces 10.1 percent cut with 0.5 percent increase through June 30, 2008. If
Congress fails to take action before the end of next June, physicians will face a cut of
approximately 10.6 percent
•    Authorizes additional 1.5 percent bonus for Medicare physician quality reporting
initiative (PQRI activities) through Dec. 31, 2008
•    Extends floor for work geographic adjustment and physician scarcity bonus through
June 30, 2008
•    Budget offsets: remove $1.5 billion from Medicare Advantage stabilization fund;
eliminate physician payment fund carried over from 2006 Medicare package and reduce
payments for some Part B drugs
•    Extends therapy cap exceptions, pathology billing exception and premium assistance
for some low-income seniors for six months
•    Extends SCHIP funding through March 31, 2009 (additional funding for current
enrollment)

Key policies not included in Senate Medicare package
•    Limitations on physician-owned hospitals
•    Electronic prescribing requirement or reductions in payments for paper scripts
•    Imaging provisions to reduce payments, mandate accreditation or establish
appropriateness demonstration projects
•    Change direction of Medicare’s Quality Improvement Organization (QIO) program to
focus on enforcement and require changes in QIO Boards
•    Provisions to alter or supplant the role of the Relative Value Update committee and
provide Medicare with authority to make arbitrary payment cuts for rapidly growing
services
•    Create specialty specific expenditure targets

Why did Congress only pass a six-month Medicare physician payment package? 
•    Dysfunctional federal government: The hyper-partisan environment in Washington has
resulted in gridlock on several fronts (Medicare, SCHIP, tax policy, health system
reform, shifting spending priorities, etc.).
•    Congressional avoidance of tough choices required by paygo: Averting sustainable
growth rate (SGR) cuts requires budget offsets under paygo rules. No one expected the
Senate Finance Committee to accept the level of Medicare Advantage cuts approved by the
House. However, as time ran out on the session, Congress allowed savings options on
Medicare Advantage and other Medicare policies developed by CBO, MedPAC, GAO and the HHS
IG to be removed from consideration. If Congress does not offset the cost of fixing the
physician payment formula with reductions in other Medicare spending, it resorts to
temporary band-aids that dig the hole deeper and grow the problem.
•    Bush veto threat: The Bush Administration threatened to veto a Medicare package that
reduced Medicare Advantage payments. The Senate Finance Committee was considering modest
reductions in Medicare Advantage payments that would have paid for a one-year physician
payment package prior to the White House veto threat.

AMA’s vision for 2008: Harness the collective resources in medicine to reform the system 
•    The challenge: Passing legislation by the June 30 deadline with a narrowly divided
Senate will be difficult. To succeed, medicine must effectively target our resources,
deliver an extremely unified and focused message and make sound Medicare physician
payment the No. 1 priority for the next six months.
•    A team effort: In the next few weeks the AMA will be working closely with state and
national specialty societies to develop, coordinate and execute the 2008 campaign plan. 
•    Register for the AMA National Advocacy Conference: The AMA’s National Advocacy
Conference scheduled for April 1-2 in Washington, D.C., provides a timely opportunity for
medicine to make “house calls” on Capitol Hill. Join your colleagues in meetings with
Members of Congress to press for real reforms www.ama-assn.org/go/nac.
•    AMPAC: With so much at stake in the 2008 congressional elections, the American
Medical Association Political Action Committee (AMPAC) is gearing up to be a pivotal
force in key races for the U. S. House and Senate. A new major donor category, Capitol
Club Gold, has been created to assure adequate resources for this effort. AMPAC is
consistently recognized as one of the most effective political action committees in the
country. To learn more about AMPAC, visit www.ampaconline.org.
•    Expanding activities with patient groups: The AMA will build on recent joint
activities with AARP and other patient groups to heighten grassroots pressure for
congressional action.
•    Local events: As Tip O’Neil pointed out, “all politics are local.” The AMA will work
closely with county, state and national specialty societies to conduct a broad array of
events in key states and congressional districts. This will include medical town hall
meetings, media events and joint programs with patient groups.
•    Join our Physician Grassroots Network at www.ama-assn.org/grassroots.

Medicare participation decision
CMS officials have confirmed that, in light of this week’s legislative intervention, the
Medicare Participation decision period is being reopened for an additional 45 days. There
was previously a deadline of Dec. 31, 2007 for physicians to decide if they would be
“participating” or “non-participating” physicians for 2008; the new deadline to notify
carriers of changes in participation status is Feb. 15, 2008. 

We have asked CMS whether participation decisions for 2008 will be binding for the entire
year or only for six months, and whether there will be another participation period
before the 0.5 percent payment update expires on June 30, 2008. For now, CMS has
indicated that participation decisions made by Feb. 15, 2008, will be binding for the
entire year. If new information becomes available we will let you know.

Please see the “Medicare Participation Options” document at
http://www.ama-assn.org/ama1/pub/upload/mm/399/medicarepayment08.pdf reflecting the
extension of the deadline and the six-month payment update.

For more information, please follow this link:
http://www.ama-assn.org/ama/pub/category/17503.html


Abid Mogannam &
Brian Potts MD, MBA
Managing Editors, CAL/AAEM News Service
University of California, Irvine

The CAL/AAEM Archives are available at: http://maillists.uci.edu/mailman/public/calaaem/



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