April 1997
Volume 61 |
Number 4
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WASHINGTON REPORT
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| GOP Leaders Voice
Criticisms of President's Medicare Budget |
Michael Scott, Director
Governmental and Legal Affairs
When the President first announced his fiscal year 1998 budget
plan to cut Medicare spending by $100 billion over five years,
most GOP leaders in the Congress expressed optimism that a deal
could be struck. More recently, however, as the details of the
President's plan became known, those same individuals have begun
to criticize the plan as containing only spending cuts without
offering fundamental reforms.
Many Republicans, most notably William M. Thomas (R-CA), Chair
of the Ways and Means health subcommittee, believe that the Medicare
program should be shifted from a defined benefit program, as it
now is, to a "defined contribution" program under which
enrollees would receive a fixed amount for health insurance. This
shift, they argue, is the only way to bring federal Medicare spending
under long-term control.
The Administration acknowledges that the FY98 budget is only
a short-term "fix," designed to stave off the impending
bankruptcy of the Medicare Part A Trust Fund. Donna Shalala, Secretary
of Health and Human Services, told Congressman Thomas' subcommittee
in early February that fundamental changes should await further
public education; the President is believed to support appointment
of a national commission to propose long-term solutions for the
program.
Whatever the outcome of this debate, it is all but certain that
a Medicare budget bill will be passed by Congress this year, and
it is equally certain that the bill will contain the proposal,
discussed in this column last month, to move to a single conversion
factor under the Medicare Fee Schedule next year. The impact of
this move on the anesthesiology conversion factor will almost
certainly be the primary issue to be discussed at the ASA Legislative
Conference on April 13-15.
In anticipation of that fact, ASA's position statement on "Change
to a Single Conversion Factor: Treatment of Anesthesiology"
is set forth in the box accompanying this article. ASA leaders
will ask Legislative Conference participants to carry this message
to Capitol Hill during their congressional visits.
Billing Software May Create Bundling Issues
ASA members confronted with a sudden change in third-party payer
reimbursement policies will be well-advised to investigate whether
the source of the problem is new billing software purchased by
the payer from an outside source. Complaints to the third-party
payer about the change will often elicit the response that the
company is simply following the payment policies generated by
the software, and efforts to determine its medical assumptions
from the software developer may prove equally unavailing.
Diligence and sound logic can sometimes reverse this, however,
as was the case earlier this year when an ASA member discovered
that a particular private payer had suddenly begun to disallow
claims for placement of invasive monitors in addition to claims
for the anesthesia procedure itself. The member learned that the
source of the change was billing software, recently purchased
by the payer, which automatically bundled the two services.
The ASA member, supported by ASA, approached the software producer
and pointed out the inappropriateness of the bundling for a variety
of reasons. Although neither the member nor ASA was able to determine
on what medical basis the software producer had decided to bundle
the two services, the producer agreed to review the matter internally.
Early last month, ASA learned that the software company had reversed
its earlier decision and had so advised all of its customers.
HCFA is currently experimenting with the use of purchased "black
box" billing software in connection with the Medicare program,
and one of the concerns expressed by organized medicine is that
this will prevent providers from learning the basis for bundling
and other adverse payment decisions. ASA members are urged, however,
to remain alert to unexplained changes in third-party payer policies
and, if such a change is traced to a purchased software program,
to press the producer for an explanation of the medical reasoning
behind the change.
Surgical Lobby to Fight Practice Expense Cuts
Meeting in Washington on February 25, a large number of surgical
specialty societies agreed to mount a coordinated effort to persuade
the Congress to "pull the plug" on HCFA's current rule-making
effort to establish resource-based practice expenses on the basis
of proxy data. As reported in this column last month, preliminary
figures released by HCFA in January indicated that some surgical
specialties would lose 40 percent and more of their current Medicare
reimbursement dollars, effective January 1, 1998.
The surgical groups are expected to work through the Practice
Expense Coalition, of which ASA has been a member since its organization
three years ago. The Coalition has been attempting to work with
HCFA to develop an accurate measure of practice expenses, but
as noted by Coalition Chair Randy Fenninger at the recent surgeons'
meeting, the current HCFA method appears to be "fatally flawed"
and must be discarded.
Because only 16.6 percent of anesthesiology reimbursement under
the MFS is attributable to practice expenses, compared to 40 percent
to 50 percent for other specialties, anesthesiology's direct stake
in the debate is not as great as most groups. ASA has also learned
informally from HCFA that even current HCFA methods, based on
proxy data, are not expected to significantly affect reimbursement
for anesthesiology services, favorably or unfavorably. ASA has
nonetheless sponsored a national survey of more than 200 anesthesiology
groups in order to assure the accuracy of HCFA's practice expense
proposal for anesthesiology, expected to be published in May or
June.
Managed Care Excesses Generate House Bills
Picking up on momentum generated in the 104th Congress, a number
of House members have introduced or are co-sponsoring new bills
designed to rein in managed care abuses. The first of these, H.R.
66, is co-sponsored by Congressmen Tom Coburn (R-OK) and Sherrod
Brown (D-OH), and would mandate availability of the "point
of service" option at time of enrollment, would prohibit
incentive clauses designed to limit care and would require internal
appeal procedures for providers and patients. The bill, which
enjoys broad bipartisan co-sponsorship, is being actively supported
by the Patient Access to Specialty Care Coalition, of which ASA
is a member.
Congressman Greg Ganske (R-IA) has introduced H.R. 586, which
would ban "gag" clauses forbidding providers from discussing
treatment options with patients. This bill, also supported by
the Coalition, enjoys approximately 125 co-sponsors from both
parties. Gag clauses have already been banned by the Administration
for health maintenance organizations serving Medicare or Medicaid
patients.
Most recently, Congressman John D. Dingell (D-MI), ranking minority
member of the House Commerce Committee, has introduced H.R. 820,
which would bar insurers from denying access to specialists by
enrollees suffering from life-threatening and other serious conditions.
The bill would also ban gag clauses and would deal with unreasonable
limits on institutional stays, as in the case of "drive-by"
mastectomies. Senator Edward M. Kennedy (D-MA) will be introducing
companion legislation in the Senate.
CHANGE TO A SINGLE CONVERSION FACTOR: TREATMENT OF ANESTHESIOLOGY
Budget reconciliation bills proposed in 1995 and 1996 contained
a provision to establish a single conversion factor under the
Medicare physician fee schedule. Currently, except for anesthesia
services, there are three conversion factors: surgical services
($40.96 for 1997), primary care services ($35.77) and other nonsurgical
services ($33.85). The prior budget proposals would have established
the single conversion factor at the level of the conversion factor
for primary care.
In developing the fee schedule, Congress mandated that anesthesia
services be reimbursed under a method different from that applied
to other physician services. Essentially, payment for an anesthesia
service is determined by multiplying the anesthesiology conversion
factor by the sum of base units, reflecting the complexity of
various procedures, and time units, reflecting the actual time
involved in performing a specific case. For purposes of determining
the annual update to the conversion factor under the Medicare
Volume Performance System, anesthesia prior to 1996 was classified
in the "other nonsurgical" category. In 1996, anesthesia
was moved by Congress to the surgical category. The 1997 anesthesia
conversion factor is $16.68. The treatment of the anesthesia conversion
factor was not dealt with in the 1995 and 1996 proposals to establish
a single conversion factor.
Since the President's budget proposes the establishment of a
single conversion factor, the question arises as to how the anesthesiology
conversion factor will be treated equitably. Obviously, there
is no intent to assign anesthesiology the same conversion factor
as all other physician services (i.e., in the $36 range), since
that would result in a more than doubling of expenditures for
anesthesiology services. Seeking to reduce the anesthesiology
conversion factor by the same percentage as that of the surgical
service conversion factor would be clearly inequitable, since
anesthesiology has been assigned to the surgical category for
only two years. As indicated, prior to 1996, anesthesiology was
considered a nonsurgical service and received substantially lower
updates than surgical services for 1993, 1994 and 1995. Since
1992, the first year of the physician fee schedule, the total
fee schedule update (compounded) for surgical services has been
36.9 percent. In contrast, anesthesiology received increases totaling
only 20.4 percent, just about the same as primary care (19.8 percent).
ASA submits that fairness requires that account be taken of anesthesiologists'
unique update experience over the entire history of the Medicare
Fee Schedule. In light of the fact that anesthesiology's compounded
cumulative updates show only an 0.6 percent percentage point difference
from those of primary care, ASA believes the anesthesiology conversion
factor should be keyed to treatment of the primary care category,
with proper account being taken of that 0.6 percent difference
in the cumulative updates in the primary care and anesthesiology
conversion factors.
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