Government

CMS won't tap reserve fund to ease Medicare physician pay cuts; money marked for reporting bonuses

The decision goes against the advice of the American Medical Association and 85 other physician and health professional organizations.

By David Glendinning — Posted July 23, 2007

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Physicians would miss out on the chance to see their Medicare payment cuts shaved by two percentage points next year under a Bush administration proposal that opts against using a special reserve fund to lessen the reimbursement hit.

The proposed Medicare payment rule issued July 2 by the Centers for Medicare & Medicaid Services projects that next year's across-the-board physician cut will be 9.9%, the same as the previous estimate. The rule also announced for the first time that a $1.35 billion reserve fund Congress set aside last year to address physician payment and quality of care will not go toward decreasing that percentage.

"We believe it is essential that Medicare continue to encourage improvement in the efficiency and quality of health care delivered to Medicare beneficiaries," CMS states in the rule. "Therefore, we are proposing that the $1.35 billion be used to fund bonus payments to be made during 2009 for physician reporting of measures during 2008."

So instead of reducing the 9.9% cut to about 7.9% for all physicians, CMS will use the additional money to pay an estimated bonus of less than 2% to doctors who participate in the Physician Quality Reporting Initiative when the agency renews it next year. The PQRI launched July 1, and its initial phase runs for the last six months of 2007. Physicians who are participating this year are eligible for a 1.5% bonus -- payable in the middle of 2008 -- on all of their Medicare claims during that 2007 time period.

The American Medical Association and 85 other physician and health professional organizations had recommended strongly to the Bush administration that it use the full reserve fund to lower the size of the cut for all participants in Medicare Part B.

"In today's rule, CMS has chosen to spend all of the money to provide just 1.5% to 2% to physicians who report on certain quality measures," said AMA Trustee Cecil B. Wilson, MD. "The AMA is extremely disappointed in this shortsighted decision."

Before issuing the final rule this fall, agency officials could change their minds about where to direct the reserve fund. But although the rule acknowledges that CMS has the prerogative to use the money to the benefit of all physicians, "fundamental legal and operational problems with this approach" make it unworkable, the document states.

For instance, CMS would need to give all doctors a low enough update to make sure total additional spending for 2008 does not exceed the fund's balance. But that raises the question of how the agency would spend whatever portion of the $1.35 billion might be left over at year's end -- and if it has the statutory right to spend it.

Another year of PQRI

The proposed Medicare payment rule confirms for the first time that the quality reporting initiative will be renewed in January for at least a year.

But not every doctor is able or willing to do the extra work needed to vie for the bonuses. Some already have decided that participating in the initial six-month run of the PQRI is not worth the burden of collecting information on quality measures and reporting it to the government, said many physicians at the AMA Annual Meeting in Chicago last month.

Participation in the PQRI next year likely will involve even more work on doctors' part than it does now. Although CMS will not finalize the 2008 participation and bonus requirements until late fall, it proposes to add potentially scores of physician quality measures to the program.

In 2008, the reporting initiative will retain up to 60 of the 74 measures in place for its initial six-month run. To add to that base, CMS will choose from a list of nearly 60 measures developed by the AMA-convened Physician Consortium for Performance Improvement. The consortium has OK'd 184 measures, many of which were chosen for the first stage of PQRI.

CMS also will consider dozens of additional measures created by other quality organizations. To pass muster with Medicare, quality measures must be approved by the National Quality Forum or the AQA Alliance.

The Bush administration has high hopes for using the voluntary quality reporting initiative to improve patient care and save money, said CMS Acting Administrator Leslie V. Norwalk. "The Medicare program needs to compensate physicians appropriately for the services they provide to people with Medicare, but how the program pays also matters," she said. "We think the early work on the PQRI program is one of those reforms that could help lead us to a point where we can promote better quality care and more efficient care."

The pressure is on

CMS' decision not to use the reserve fund to lower the size of next year's cut puts added pressure on physician organizations that are fighting for a legislative solution to the problem.

Using the reserve fund in this way would have made the cost of reversing the remainder of the cut less expensive. The AMA and other physician organizations are hoping that a temporary payment fix of at least two years will be able to hitch a ride on legislation to reauthorize the State Children's Health Insurance Program, set to expire at the end of September. But disagreement between Democratic leaders in Congress and the White House over how much funding to commit to SCHIP could complicate efforts to add even more new spending for physician pay or other priorities, congressional aides said.

Nevertheless, lobbyists for physician organizations are confident that lawmakers will do the job. "We have commitments from both the House and Senate leadership that they will not let this cut go through," said Kevin Burke, director of the American Academy of Family Physicians' division of government relations.

CMS will accept comments on its proposed rule through August.

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ADDITIONAL INFORMATION

Payment rule policy changes

The Centers for Medicare & Medicaid Services proposed rule that projects the 2008 payment update also contains several policy revisions. If the rule is finalized as written, it will:

  • Increase the work component of the relative value for anesthesia services by 32%.
  • Adopt more than 50 additional relative value unit changes that were approved last year but not implemented.
  • Define and regulate bundled arrangements for Medicare Part B drugs.
  • Renew temporary payment for preadmission-related services for intravenous infusion of immunoglobulin.
  • Require that people furnishing physical and occupational therapy under Medicare meet licensing, registration or certification rules in the state in which they practice.
  • Mandate reporting of hematocrit data on claims for anemia treatment in cancer patients.

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