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March 1997
Volume 61 |
Number 3
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WASHINGTON REPORT
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| President Proposes
Move to Single CF; Shift to Update Formula Based on GDP |
Michael Scott,
Director
Governmental and Legal Affairs
In February, President Clinton sent Congress his fiscal year
1998 budget proposal, calling for Medicare savings of about $100
billion over five years. Of this amount, about
$7 billion would be derived from constraints on physician fees,
a relatively modest number when compared to the Administration's
proposals during the President's first term.
Centerpiece of the FY1998 proposal for physicians is, as expected,
a call for establishment of a single Medicare Fee Schedule (MFS)
conversion factor beginning in 1998, initially equal to the anticipated
primary care conversion factor for that year, reportedly $36.63.
This move would eliminate the existence of three different MFS
conversion factors, currently $40.96 for surgery, $35.77 for primary
care and $33.85 for all other services.
Contrary to the recommendation of the Physician Payment Review
Commission, the Administration proposes no transition to the new
single rate, which would mean a dramatic drop in payments for
surgery in 1998 and a modest increase for the "all other"
category. The Administration proposal does not deal specifically
with treatment of the separate anesthesiology conversion factor
(CF). Anesthesiology for the past two years has been updated as
part of the surgical category, but since inception of the MFS,
ASA's aggregate updates on a compounded basis have totaled just
0.6 percent more than the primary care updates. ASA believes this
fact should be taken into account in setting the 1998 anesthesiology
CF.
The Administration's proposal also calls for replacing the current
volume-performance-based CF update system with an update based
on increases in the real gross domestic product (GDP) per capita
growth plus 1 percentage point. Most analysts agree that the current
system would lead eventually to a series of negative CF updates
and that the new system makes more sense. Debate will center around
whether the update should be based upon GDP plus 1 percent, as
recommended by the Administration, or GDP plus some greater percentage
up to 4 percent, as recommended by the American Medical Association.
The Administration's budget again includes the now-familiar proposal
to limit payments to physicians practicing in hospitals whose
volume and intensity of services per admission exceeded 125 percent
of the national median for urban hospitals and 140 percent for
rural hospitals. Organized medicine, including ASA, has vigorously
opposed this concept in the past as both unworkable and unfair
to individual physicians.
The 1998 budget proposes expansion of the "centers of excellence"
demonstration program to all urban areas by allowing Medicare
to pay select facilities a single bundled fee for all services
(including anesthesia) associated with cardiovascular procedures,
knee surgery, hip replacement surgery and other common procedures.
Of interest to academic anesthesiologists, the Administration
again proposes to carve out direct graduate medical education
(GME) and indirect medical education (IME) and "disproportionate
share" support from payments to managed care organizations
and pay it directly to eligible hospitals. The proposals would
also cap the total number of nonprimary care residency positions
at the current levels, count work in nonhospitals for IME payments
and allow GME payments to nonhospitals in certain circumstances.
As reported in this column two months ago, treatment of the anesthesiology
CF in any move to a single CF for other specialties looms as the
largest issue for the specialty as the budget process moves forward.
ASA representatives met with several key congressional staff members
on this issue even before the President's budget was released,
and the issue will be a primary focus of congressional visits
during the upcoming ASA Legislative Conference in April.
HCFA Outlines Options for MFS Expense Revisions
On January 22, Health Care Financing Administration (HCFA) representatives
held a public meeting in Baltimore to explain the various options
that HCFA was then considering as a basis for determining indirect
practice expenses under the Medicare Fee Schedule (MFS). As previously
reported in this column (ASA
NEWSLETTER, November 1996), HCFA attempted to determine
indirect practice expenses on the basis of a survey of approximately
5,000 medical practices. HCFA abandoned those efforts last fall
because of a
low response rate to its survey.
By reason of a congressional mandate, HCFA is required to put
into place by January 1, 1998, a system of resource-based practice
expenses, substituting for the current system, based on reported
charges, which was developed at the inception of the MFS. Last
year, under a contract with Abt Associates Inc., HCFA sought to
determine direct (per case) practice expenses through the
use of so-called Clinical Practice Expert Panels, and HCFA is
now considering the conclusions of those panels.
Abandonment of the indirect practice expense survey put HCFA
behind the eight-ball in more ways than one. First, given the
pace and legal requirements of regulatory action, there was precious
little time left before January 1, 1998, for HCFA to develop a
substitute resource-based system. Second, the unavailability of
actual data gathered from the marketplace means that HCFA would
need to rely upon "proxy" data, that is, derive indirect
practice expenses from their relationship to other features of
physician practice such as time, work, staff time or the like.
Preliminary data presented at the January 22 meeting confirmed
the worst fears of a number of specialties about the soundness
of HCFA's current proxy data approach. For anesthesiology, the
meeting was a big, fat zero, since HCFA representatives said they
had not yet turned their attention to the specialty. For many
of the surgical specialties, the meeting was a nightmare. Using
the four tentative proxy options HCFA outlined, the total
number of relative value units (RVUs), not just the practice expense
RVUs, per specialty would be cut by the percentages in Table 1,
below. Big winners would be nonphysicians: chiropractors (plus
27-54 percent), optometrists (plus 35-40 percent) and podiatrists
(plus 23-41 percent).
| Table 1 |
Proposed Cuts |
| Cardiac surgery |
32-44 percent |
| Thoracic surgery |
28-40 percent |
| Neurosurgery |
25-30 percent |
| Cardiology |
20-25 percent |
| Gastroenterology |
20-24 percent |
| Orthopedic surgery |
9-16 percent |
| Radiology |
4-25 percent |
| Ophthalmology |
2-7 percent |
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HCFA emphasized that its estimates were only preliminary, but
those estimates were sufficient to send shock waves through the
physician specialist community. The Practice Expense Coalition,
of which ASA is a member, is already on record as advocating a
delay in implementation of resource-based values, to allow more
time for accurate values to be determined and verified. As of
this writing, the Coalition's leadership was considering an even
more vigorous lobbying effort, perhaps to require a complete rethinking
by HCFA of the practice expense exercise.
Because the HCFA data did not include anesthesiology, it is difficult
for ASA to determine a current course of action. What is known
is that with the 22.76 percent increase in anesthesiology work
values as of January 1, 1997, practice expenses represent only
16.6 percent of Medicare reimbursement for anesthesiology services.
Since one can assume that billing, accounting and collection cost
every anesthesiology practice between 5 percent and 10 percent
of receipts, the potential "swing" for the specialty
in this exercise is not as dramatic as for many other specialties.
As previously reported, moreover, ASA has commissioned Abt Associates
to conduct a survey of indirect practice expenses, using a survey
form that is considerably more user-friendly than the one employed
by HCFA a few months ago. About 200 randomly chosen anesthesiology
practices are being contacted, and the survey results will be
used to evaluate whatever proposal HCFA develops for the specialty.
HCFA's proposed regulation is expected to be published in May.
Commentary
Editor's Note: Following is the text, in slightly altered
form, of a letter written recently by Mr. Scott to an ASA member
who had expressed extreme frustration with the level of Medicare
reimbursement for anesthesiology services and the apparent incapacity
of ASA and the Washington Office to deal with the situation effectively.
It may be of interest to other ASA members experiencing similar
frustrations. - E.L.
First, I want to make sure you understand that the absurdly low
level of Medicare reimbursement for anesthesiologists is really
the product of two things: 1) for budgetary reasons, the federal
government has been artificially limiting payments for all medical
services for almost two decades, thus gradually widening the gap
between Medicare and private reimbursement levels; and 2) anesthesiology
work values were cut by 41 percent in 1992 at the inception of
the Medicare Fee Schedule, as recommended by William C. Hsiao,
Ph.D., and his Harvard colleagues on the basis of limited comparisons
between anesthesiology work and the work of some other specialists.
Second, you should be aware that the recent 22.76-percent increase
in anesthesiology work values, whether one regards it as a victory
or a defeat, was the product of analysis, not by the government,
but by physicians comprising the membership of the AMA/Specialty
Society Relative Value Update Committee. On the basis of the Abt
studies, ASA argued vigorously for a substantially greater increase,
but in the end, the collective judgment of this multispecialty
peer group arrived at the 22.76 percent number, and the government
simply accepted this judgment. One can argue that these physicians
were too conservative (because any increase was going to come
out of their specialty's share of the Medicare physician work
dollar), but those ASA representatives who worked on the project
took some satisfaction in the fact that they at least gained back
more than half of the lost ground.
Third, you should be aware that all constitutional attacks on
the Resource-Based Relative Value Scale (RBRVS), balance billing
limits and other congressional restraints on prices that physicians
may charge Medicare beneficiaries (and there have been several)
have not been successful. I think the most recent of these was
by a group of New York anesthesiologists seeking to enjoin balance
billing limits as representing a "taking" of property
without due process. From time to time, I have been asked in my
role as counsel whether ASA should participate in such lawsuits;
because I believed they were losers, I recommended against participation.
When I think we can win, as I did when Medicare last year proposed
"bundling" invasive lines, I will not hesitate to recommend
litigation once persuasion has failed.
Fourth, a "strike" by anesthesiologists, more precisely
called a group boycott of the Medicare program, is an illegal
act under the Sherman Antitrust Act, and those participating in
such concerted action would expose themselves to both civil and
criminal penalties. If memory serves, the 1975 California physician
strike quickly dissipated in the face of Justice Department intervention.
The passage of California's Medical Injury Compensation Reform
Act (MICRA) law, while most salutary, took place several years
later as a result of a strong lobbying effort by California physicians.
Lobbying is a constitutionally protected form of group persuasion
and is not, in most circumstances, subject to antitrust attack.
Fifth, we cannot ignore the fact that our efforts to improve
the economic rewards for anesthesiologists are complicated by
the ongoing push by organized nurse anesthesia for independent
practice and full professional parity. In a time when the cost
of care is often regarded by employers and insurers (public and
private) as more important than the quality of care (though they
will never say so), the nurse anesthetists' "low cost, equal
quality provider" pitch does not go unheeded.
When an ASA member complains to me that Medicare rates are ridiculously
low, the member is preaching to the choir. My colleagues and I
here in Washington live with that frustration every day and, if
we become complacent, we have 21,000 actively practicing anesthesiologists
to remind us. But for better or worse, the framework of federal
and state law requires that we deal with that problem through
the use of reasoned persuasion, protected by the Constitution,
and not by the use of concerted economic actions or some other
"magic bullet." So we chip away, every day. There are
lots of other people chipping away around here too, and they don't
always agree with us. So we win a little bit sometimes, and we
lose a little bit sometimes, just like the American Medical Association,
the managed care industry, the American Association of Retired
Persons, the nurses, and so on.
But the ugly reality remains that the federal government cannot
afford the Medicare program, and it's a heck of a lot easier politically
to make up the growing shortfall by stinging 600,000 providers
than by asking 37 million beneficiaries to kick in some more money.
The same is true of Medicaid, a program that is breaking the fiscal
backs of most states and is a drain on the federal budget . All
this means that there is more bad news ahead than there is good
news, but we will continue to keep fighting to keep the news in
balance.
I appreciate your interest and invite you to help us deal with
these matters through our annual Legislative Conference (April
13-15), by becoming a "key contact" for your federal
legislators and through membership in ASAPAC. The latter contributed
more than $650,000 to congressional candidates during the last
election cycle, and it is this kind of involvement in the political
process that makes anesthesiology a "player" on Capitol
Hill. This does not mean we always succeed, but it does mean we
will be heard.
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