Medicare Bill Not Perfect

TMA Supports CHAMP, But Works for Changes

Texas Medicine Logo(1)  

Legislative Affairs Feature - September 2007  


By  Ken Ortolon
Senior Editor  

Although it supports legislation that reauthorizes the federal Children's Health Insurance Program (CHIP) because it also cancels a planned 10-percent cut in physicians' Medicare fees next year and a 5-percent cut in 2009, the Texas Medical Association is working to address other provisions that cut Medicare payments for imaging and nuclear medicine and restrict physicians' rights to own an interest in medical facilities.

As this issue of Texas Medicine  went to press in August, TMA physician leaders and lobbyists were working with the state's congressional delegation to amend the Children's Health and Medicare Protection (CHAMP) Act to alter the imaging and ownership provisions. Three senior TMA staff members met with the Texas congressional delegation and top Medicare officials in Washington, D.C., in July.

The bill prohibits new physician-owned hospitals and other facilities and limits total physician ownership interest in existing hospitals to no more than 40 percent overall. Individual physicians could own no more than 2 percent of any hospital or facility.     

TMA President William W. Hinchey, MD, wrote the delegation in early August and urged it to support changes to the imaging and ownership provisions as the bill moves through the legislative process. Specifically, he said, Congress should revise the provisions to:

  • Ensure that ownership is responsible and patient-centered and includes a commitment to appropriate peer review of utilization, quality, and safety to assure the highest quality care regardless of who owns the facility;
  • Promote transparent transactions, governance, and quality standards; and
  • Ensure the highest quality of care, the most appropriate service, at the most affordable cost - looking globally, particularly in areas like imaging where the procedure has resulted in significant cost avoidance.

"As this bill moves forward, we urge you to act to revise these provisions in the CHAMP Act to improve patient care and not detract from it," Dr. Hinchey wrote.

The bill has provisions TMA supports and provisions it opposes.

The good provisions are:

  • It provides the first positive update for physician Medicare payments in three years: one-half percent each in 2008 and 2009;
  • It fixes the floor on geographic cost adjustments for two more years, the Geographical Practice Cost Index (GPCI); and
  • It reauthorizes CHIP, set to expire Sept. 30, with an additional $50 billion over the next five years.

However, the onerous proposals that must be removed are:

  • The section that limits physician ownership of hospitals to 40 percent for all physician investors and 2 percent for any single physician, and
  • The section that calls for cuts for imaging and nuclear medicine.

The bill has generated strong emotions among individual physicians in e-mails to TMA Executive Vice President/Chief Executive Officer Louis J. Goodman, PhD.

Edinburg gastroenterologist Carlos J. Cardenas, MD, for example, described the ownership provisions as "a direct attack on physician autonomy" and said physicians "must fight to promote both physician autonomy and the improvement in the quality of care that is threatened" by the provisions.

"The language is nothing short of confiscatorial and reminiscent of acts committed in other totalitarian states or quasi-totalitarian states. Venezuela comes to mind," he said.

Gerald D. Dodd III, MD, chair of the Department of Radiology at The University of Texas Health Science Center at San Antonio, added that the imaging fee cuts would be disastrous for access to imaging services.

The House and Senate passed two different versions of CHAMP in early August, and the differences between the two bills must be resolved by House and Senate negotiators before the final version goes to President Bush.

TMA officials, however, say there was not universal support for the measure among House Democrats. Members of the Congressional Black Caucus largely oppose the bill's cuts to payments to private insurers who offer Medicare Advantage plans, while some southern Democrats oppose proposed tobacco tax hikes to finance the CHIP expansion and Medicare fix, say TMA staffers who were involved in the Washington meetings in July.

But even if a bill is passed, President George W. Bush is threatening to veto it for reasons that have nothing to do with Medicare physician payments. He and Democratic leaders are at odds over how much to spend on CHIP.

The president threatened a veto after the Senate Finance Committee approved a CHIP reauthorization bill that spends an extra $35 billion over the next five years. That's $15 billion less than what the House Democrats want to spend. And the Senate bill does not address the Sustainable Growth Rate (SGR) fix, which TMA officials say pushes the total cost of the House bill to roughly $100 billion.

President Bush wants to increase CHIP spending by only $5 billion.

Congressional aides say they believe a veto is very likely, meaning Congress would have to try again to reauthorize CHIP and fix the SGR formula upon which Medicare payments are based.


The New CHAMP  

House Democratic leaders introduced the CHAMP Act in July. It cancels the 2008 10-percent cut in Medicare physician payments and guarantees a 0.5-percent increase for doctors in both 2008 and 2009. The bill also scraps the Medicare SGR formula that has produced fee cuts for the past several years and replaces it with a system of six separate payment updates for primary care and preventive services, other evaluation and management services, major procedures, anesthesia services, imaging services, and minor procedures and other services.

TMA officials say the bill guarantees physician fee increases in Medicare for at least two years, but they are uncertain how the new payment formula would play out in subsequent years.

Beginning in 2010, the annual allowed growth rate for primary care and preventive services would equal the growth in the gross domestic product (GDP), plus 3 percent. The growth rate for all other services would equal the GDP growth rate.

Canning the SGR for a new payment mechanism would be good news for physicians. Without congressional intervention, the SGR would produce drastic fee cuts for doctors over the next several years. Even with previous congressional action, physicians saw only a 1.5-percent increase in their payments in 2004 and 2005, and no increase in 2006 and 2007.

During the same period, hospitals saw their payments increase between 3 percent and 4 percent annually, while private insurers that sponsor Medicare Advantage plans got increases of from roughly 5 percent to 7 percent per year.

In addition to replacing the SGR, the measure extends for two years the floor for the work component of the geographic practice cost index (GPCI) and provides a 5-percent bonus payment, effective in 2009, for physicians in areas with the lowest per capita Medicare spending.

The bill also adjusts GPCI localities for California and ultimately makes similar adjustments in other states, drops the cost of physician-administered drugs and laboratory tests from the target growth rate calculations, requires accreditation of staff and equipment as a condition of payment for imaging services beginning in 2012 for ultrasound and in 2010 for other services, and directs the U.S. Centers for Medicare & Medicaid Services to make several methodology changes that will reduce imaging payments in 2008 and thereafter.


Cutting the Advantage  

The proposal to cut payments to Medicare Advantage plans was suggested by the Medicare Payment Advisory Commission, which has recommended financial neutrality between traditional Medicare fee-for-service and Medicare Advantage plans. Medicare Advantage plans currently receive average payments 12 percent higher than payments under fee-for-service Medicare, according to the American Medical Association. That amounts to a $65 billion subsidy over five years for private health plans, AMA says.

AMA and AARP, which endorsed the CHAMP Act before it was officially unveiled, have launched national advertising campaigns in support of the bill, but tobacco companies and health insurers also are aggressively fighting the proposed tobacco tax hike and Medicare Advantage payment cuts.

Several national medical specialty societies also have endorsed the bill, including the American College of Surgeons, the American College of Physicians, the American Academy of Pediatrics, the American Association of Neurological Surgeons, the Congress of Neurological Surgeons, the American College of Obstetricians and Gynecologists, and others.

The New York Times reported that America's Health Insurance Plans, formerly the American Association of Health Plans, plans to organize small groups of seniors and rent minivans to take them to district offices of House members to speak out against the cuts.



If the CHAMP Act fails or is vetoed, two Texas congressmen already have alternative SGR legislation filed. U.S. Rep. Pete Sessions (R-Texas) has filed legislation similar to the SGR fix in the CHAMP Act. His bill would set separate payment formulas for seven categories of physician services, including evaluation and management, radiology services and diagnostic tests, major procedures, anesthesia services, minor procedures and other services, diagnostic laboratory tests, and physician-administered drugs, biologicals, and radiopharmaceuticals.

"Physicians serve as the foundation for the Medicare program, and Congress has the responsibility to ensure that Medicare's successful health care alliance is not undermined through the current unpredictable and punitive physician payment system," Representative Sessions said.

His bill would not tie payment updates to the GDP but instead would base them on a formula that takes into account trends in physician spending, changes in laws and regulations, and Medicare fee-for-service enrollment.

U.S. Rep Michael Burgess, MD, (R-Texas) also has filed a bill to scrap the SGR beginning in 2010 and replace it with the Medical Economic Index. (See "Legislation Addresses Medicare, Physician Workforce Issues" below.) His bill also would provide a 3-percent bonus payment for quality reporting and a 3-percent bonus for health information technology implementation, both beginning in 2008.

Neither of those bills had been heard in committee as of late July.

Ken Ortoloncan be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at Ken Ortolon .  



Legislation Addresses Medicare, Physician Workforce Issues

U.S. Rep. Michael Burgess, MD (R-Texas) has filed three bills to solve what he calls an "impending physician workforce crisis" in America.

The bills are designed to reform the Medicare payment system, increase the number of physicians being trained, and encourage physicians to go into needed specialties.

Congressman Burgess says his legislation should ensure an adequate physician workforce as the demand for health care services grows with the aging of the baby boom generation.

The Ensuring the Future Physician Workforce Act eliminates the Medicare Sustainable Growth Rate formula beginning in 2010 and replaces it with the Medical Economic Index.

The Physician Workforce and Graduate Medical Education Enhancement Act authorizes $25 million over a 10-year period to establish an interest-free loan program for eligible hospitals in rural and small urban areas to establish residency training programs in family medicine, internal medicine, pediatrics, emergency medicine, obstetrics-gynecology, or general surgery.

The High-Need Physician Workforce Incentives Act provides $25 million over five years for a scholarship program for generalist physicians in high-need areas to alleviate shortages of physicians in several primary care specialties. It also provides:

  • $25 million over five years to establish a loan repayment program for generalist physicians who agree to serve in a critical shortage area;
  • $50 million over five years for grants to states to provide financial aid to physicians in medically underserved areas to support patient-centered, coordinated care in a qualified medical home, and
  • $5 million over five years to make grants to board-certified entities to establish or expand geriatric fellowship programs in rural, suburban, or medically underserved communities.

"Thirty-four percent of physicians practicing medicine in the United States are within 10 years of retirement age," said John Strosnider, DO, president of the American Osteopathic Association, which has endorsed the Physician Workforce and Graduate Medical Education Enhancement Act. "The time it takes to educate and train a physician is, at minimum, seven years. This bill creates a new program that will assist in the establishment of new graduate medical education programs focusing on primary care, general surgery, and obstetrics and gynecology, which is critical to training a larger cadre of physicians."



September 2007 Texas Medicine Contents
Texas Medicine Main Page