Government

House bill creates 6 Medicare payment categories

Radiologists and other physicians worry that different conversion factors for different types of physician services could pit doctors against one another.

By David Glendinning — Posted Sept. 10, 2007

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If House lawmakers have their way, the extent to which physicians see their Medicare payment rates rise or fall year by year would depend even more on what types of services they provide.

A provision in the Children's Health and Medicare Protection Act of 2007, which the House passed Aug. 1, would alter the sustainable growth rate formula by establishing six separate categories for physician services. The categories would consist of primary care and preventive services; other evaluation and management services; major procedures; anesthesia services; imaging services; and minor procedures and all other services not falling into another category.

Instead of having a single conversion factor determining final payment amounts for all physician services, the new system would have separate conversion factors for each category. So when Medicare updates its rates at the beginning of a calendar year, for instance, the rate for an office visit might change by a different percentage from the rate for an imaging scan.

Some categories of services could undergo rate increases while others could sustain cuts.

Total allowable growth in each service group would be limited by the gross domestic product, though the primary care and preventive services category would be able to go up an additional 3%. But because each category would have its own spending target, those in which spending growth is deemed too fast would be cut -- much as overall Medicare rates are set to be cut across the board now when physicians exceed their yearly limits.

By establishing six conversion factors and six annual spending limits, Congress would get a better handle on problem spending areas without slashing rates across the board, said Thomas R. Russell, MD, the American College of Surgeons' executive director. The ACS and the American Osteopathic Assn. collaborated to develop a proposal very similar to the one included in the House legislation.

"This system acknowledges that growth in some areas, like preventive services, disease management and follow-up care, is good for patients and good for the overall health of the Medicare program," Dr. Russell said. "Right now, the SGR treats all volume growth as bad. If one area grows, all physicians must pay."

Imaging in the crosshairs

Some of the physicians who anticipate being on the losing side of this new equation are worried that the modified system would continue to be a blunt cost-cutting instrument that would ending up hurting many more doctors than it would help.

The American College of Radiology and the Society of Interventional Radiology are especially concerned, because the imaging category in particular would likely see major rate reductions under the six-category plan. Imaging has been an area of high spending growth in recent years, which has already prompted lawmakers and the Bush administration to try to rein it in. Under the proposed system, this growth in expenditures would translate into further reduced rates that would affect all imaging procedures.

"It is difficult not to imagine that this would result in anything but perpetual cuts for imaging," said Arl V. Moore Jr., MD, chair of the ACR's board of chancellors.

Instead of paying more fairly for different types of physician services, Medicare would discourage doctors from using medical imaging to move away from more invasive procedures, he said.

All physicians who provide imaging services would be affected by the service category plan. Radiologists in particular would be powerless to prevent payment cuts by limiting utilization, Dr. Moore said. That's because primary care physicians and other referring doctors generally are the ones who control how many patients are sent to the specialists to receive scans.

Makings of a turf war

Dr. Moore predicted the debate over Medicare payment rates would be taken over by "a political environment that pits physicians against each other and divides the House of Medicine." The competition based on service type for a limited pot of Medicare money means the turf battle could be fierce, he said.

The American College of Physicians and the American College of Cardiology warned that the House legislation would only perpetuate the flawed sustainable growth rate system. The bill would guarantee pay increases of 0.5% for all physicians at the beginning of 2008 and 2009. But after that, a formula basing physician pay in part on the gross domestic product would still be in full force, no matter how many conversion factors were in place. In a given year, the formula likely could dictate that all physician service areas sustain deep cuts at the same time, experts said.

"We are opposed to expenditure targets, whether they be single targets or multiple targets," said Richard Trachtman, ACP's director of congressional affairs. "Even though it's divided up into six distinct buckets, it's still based on GDP, and we've seen where that's led in the past few years."

Lawmakers this month will continue trying to negotiate a compromise between the House bill and the Senate version, which addresses children's health care but does not contain any Medicare provisions. If lawmakers in the upper chamber prevail in their demands to strip out the House Medicare provisions, that could imperil the passage of both the service category proposal and the 0.5% overall increases for the next two years.

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ADDITIONAL INFORMATION

Imaging in focus

The House-passed children's health care and Medicare bill has additional provisions that would affect pay for doctors who provide imaging services. The measure would:

  • Impose additional reductions to the technical component of claims for imaging services provided outside of hospitals.
  • End the practice of global billing for imaging services by implementing a system under which the technical component and professional component must be billed separately.
  • Make Medicare payment for imaging services contingent on certification of imaging equipment.

Source: American College of Radiology

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