Doctors fear Medicare hospital pay changes may hurt care

Washington -- Medicare's plan to pay hospitals more fairly for medical services has some physicians worrying that patients will be treated unfairly as a result.

In a proposed inpatient payment rule issued earlier this year, the Centers for Medicare & Medicaid Services outlined its plan to direct more federal money away from services for which it says hospitals are paid too much and toward services for which they are not paid enough. The proposal involves moving this October to a system in which payments are based on hospital costs, rather than charges. Then, in October 2008, CMS would begin to adjust payments based on patients' severity of illness.

The plan would not decrease the total amount of payments that Medicare makes to hospitals next fiscal year, and physician reimbursements would not be affected by the rule. The American Medical Association and other health care groups said moving to a cost- and severity-based system eventually would lead to a more equitable system for hospitals.

In the here and now, some doctors worry that the dollar shifting would make too many reductions too quickly in some of the newer and more expensive procedures that patients with heart problems and other conditions need.

Reimbursement for insertion of drug-eluting stents for patients with heart disease, for example, would fall 33% after Oct. 1 under the CMS plan. Payment for implantation of cardioverter defibrillators would be reduced 24%, while revisions of hip and knee replacements would experience a 10% hit.

Although hospitals would receive rate increases in other areas, the concern is that some might shift their focus away from the procedures that would receive significantly less Medicare reimbursement.

And although CMS said the changes would reflect more accurately the actual costs of providing the services, the rule's critics warned that the hospital cost reports upon which such rates would be set are often outdated and inaccurate. If a facility is losing too much money on a certain procedure as a result of an imprecise Medicare calculation, it might dial back the resources that it commits to such care, they said.

"When these changes are implemented, the result will be reduced patient access to what by all rights are life-saving and life-improving technologies and therapies," said Dwight Reynolds, MD, chief of cardiology at the University of Oklahoma and president of the Heart Rhythm Society.

Even physicians who don't directly deal with Medicare's inpatient payment system may feel the effects of the changes, said Frederick L. Grover, MD, chief of surgery at the University of Colorado and president of the Society of Thoracic Surgeons. Shifts or decreases in hospital staffing in certain clinical areas might leave private-practice doctors who have privileges at the facilities without the rich medical support systems on which they rely. This could raise patient safety concerns, he said.

Lobbying for delay

Such worries led a wide-ranging group of physician, hospital and device manufacturer organizations to lobby CMS and Congress to delay the upcoming changes for at least one year so that affected parties could take a closer look at the potential impact of the revisions. Two letters to CMS signed by a total of more than 200 members of Congress urged such a delay.

But in a response letter issued at press time, CMS Administrator Mark McClellan, MD, PhD, indicated that the agency still planned to move ahead with the payment changes in a final rule scheduled for release on Aug. 1. He noted that the agency would attempt to minimize the potential disruption for hospitals by incorporating some of the suggestions made by health groups during the proposed rule's comment period.

Dr. Reynolds and others said they still would have serious concerns about the move to the cost-based payment system even if CMS took the advice contained in some of the comments, such as those that urged a phase-in of the rate changes over several years. Allowing hospitals more time to adjust to the revised payment system would not prevent problems if certain vital services become significantly undervalued at the end of the process, he said.