August 1997
Volume 61 |
Number 8
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WASHINGTON REPORT
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| Balanced Budget
Legislation Passes Both Chambers |
Michael Scott,
Director
Governmental and Legal Affairs
Prior to adjourning for a weeklong Fourth of July recess, the
House and Senate both passed differing spending and tax packages
as part of the overall budget reconciliation process. Republicans
immediately hailed passage as a historic step toward balancing
the federal budget, while detractors continued to express concerns
about a number of provisions in the two bills.
The House took the first step, passing its version of the spending
legislation on June 24. This package contained projected savings
of $115 billion over the next five years from the Medicare program
alone, with another $12.6 billion in savings coming from Medicaid.
The Medicare savings would come from reduced payments to most
providers, including physicians and hospitals; additional projected
savings would come from increased enrollment in Medicare managed
care plans. The legislation would allow expanded use of medical
savings accounts for Medicare recipients as well. Also contained
in this package were spending increases of $16 billion for children's
health care programs and $13 billion for welfare aid to legal
immigrants and children.
The Senate version of the spending bill, which passed later the
same day, contains many similar provisions. The key difference
between the House and Senate package is that the Senate's Medicare
section contains three controversial provisions, one raising the
eligibility age from 65 to 67, another increasing premiums on
wealthier recipients, and a third that would require a $5 co-payment
for home health care visits.
Important to ASA members is a provision in both bills dealing
with physician reimbursement. Both proposals would do away with
the current system of three conversion factors within the Medicare
Fee Schedule; under the proposed single conversion factor, the
1998 anesthesiology Medicare conversion factor would be set at
46 percent of the new single conversion factor for all other specialties.
This change had been strongly recommended by the Physician Payment
Review Commission and ASA. This is a vast improvement over the
President's initial proposal, which would have cut the anesthesiology
conversion factor by 10 percent.
There are also a number of provisions in both bills that seek
to control managed care excesses. ASA has supported this language,
through its leading role in the Patient Access to Specialty Care
Coalition, and hopes that the final legislation will retain these
provisions.
Tax Bill Passes
The following day, the House adopted its version of a tax package
that contained sweeping tax reductions for the first time since
1981. The Senate took action later, passing its version by an
overwhelming 80-18 vote. Both bills include versions of the five
main provisions included in the budget agreement between the President
and congressional leaders: a child tax credit, a capital gains
tax cut, a reduction in estate taxes, tax credits for higher education
and an expansion in the tax-deferred individual retirement accounts
(IRAs). Nonetheless, key differences remain between the two bills,
and the upcoming conference is expected to be contentious; there
are vast differences in the provisions dealing with the family
tax credit, corporate tax cuts, the indexing of capital gains
and the tobacco tax.
Hard work remains ahead, as the House and Senate leadership must
iron out the differences in their bills throughout July. At this
time, both sides are optimistic that a final spending bill will
be on the President's desk when Congress leaves town for its annual
August recess.
The ASA Washington Office wishes to thank all
ASA Key Contacts who wrote, called or faxed their legislators
over the past several months on a number of important issues pertaining
to this legislation. Especially with respect to the conversion
factor issue, the response has been tremendously helpful.
HCFA Issues Proposed Regulation on Resource-Based Practice Expenses
On June 18, the Health Care Financing Administration (HCFA) issued
its long-anticipated proposed rule by which resource-based practice
expenses would be implemented as part of the Medicare Physician
Fee Schedule, effective January 1, 1998. Up until now, the practice
expense component of procedures and services under the fee schedule
has been derived from published socioeconomic data from the American
Medical Association (AMA), and Congress four years ago instructed
HCFA to convert to actual marketplace costs beginning next year.
For most anesthesiologists, the proposed rule brought modestly
good news, in that HCFA estimated that under its preferred method
of calculating resource-based expenses, overall payments for anesthesiology
services would rise by 4 percent upon implementation of the rule.
Accompanying this article is a table showing the estimated impact
on several specialties. The preferred option I calculates indirect
costs (rent, light, etc.) as a function of direct costs (equipment,
supplies, personnel, etc.); option II derives indirect costs from
AMA socioeconomic data.
The news is less favorable for anesthesiologists performing certain
pain procedures. Most practice expense relative value units for
these codes would drop 20-40 percent and even more in some cases,
from the current values. These reductions will result in lower
overall payment for various pain procedures; for example, implementation
of the proposed rule would result in average reimbursement for
CPT code 62278 (epidural, lumbar or caudal, single) dropping from
$93.09 to $87.63.
Comments on the proposed rule are due on August 18. Abt Associates
Inc. is currently completing its survey of anesthesiology practice
expenses, commissioned by ASA, and undoubtedly many of ASA's comments
will be based upon this study. ASA has also provided copies of
the proposed rule to subspecialty physician organizations concerned
with pain management and critical care and will work with these
organizations to develop appropriate comments on procedures in
these areas.
Whether or not comments will actually need to be filed on August
18 depends, however, on whether Congress mandates a one-year delay
in implementation of the rule and further HCFA study of practice
expense values in the interim. ASA is a member of the Practice
Expense Coalition advocating such a delay. The House has approved
the delay, followed by a four-year transition period; the Senate
has approved only a transition. If the House view prevails in
conference, then HCFA will need to decide whether to abandon the
proposed rule (and withdraw its request for comments) and head
back to the drawing board.
Table 1
Resource-Based Practice Expense Relative Value Units (RVUs)
Impact on Total Allowed Charges by Specialty for the Two Indirect
Allocation Options
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Impact of RVU Changes by Option
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|
Option I:
Direct costs, work and malpractice (percent change) |
Option II:
Pass through (percent change) |
| M.D./D.O. Physicians: |
Option I |
Option II |
| Dermatology |
+16 |
+16 |
| Rheumatology |
+15 |
+11 |
| Family Practice |
+12 |
+7 |
| Hematology Oncology |
+11 |
+11 |
| Radiation Oncology |
+10 |
+11 |
| General Practice |
+9 |
+6 |
| Otolaryngology |
+7 |
+9 |
| Anesthesiology |
+4 |
-3 |
| Other Physician |
+4 |
+2 |
| Obstetrical/Gynecology |
+4 |
+2 |
| Psychiatry |
+3 |
0 |
| Internal Medicine |
+3 |
0 |
| Urology |
+1 |
-1 |
| Pathology |
+1 |
+2 |
| Emergency Medicine |
-2 |
-3 |
| Neurology |
-3 |
-3 |
| Clinics |
-3 |
-3 |
| Plastic Surgery |
-3 |
-2 |
| Pulmonary |
-6 |
-7 |
| General Surgery |
-9 |
-6 |
| Radiology |
-9 |
-5 |
| Orthopedic Surgery |
-11 |
-5 |
| Ophthalmology |
-11 |
-6 |
| Nephrology |
-13 |
-14 |
| Vascular Surgery |
-17 |
-10 |
| Cardiology |
-17 |
-11 |
| Gastroenterology |
-20 |
-15 |
| Neurosurgery |
-21 |
-13 |
| Thoracic Surgery |
-28 |
-18 |
| Cardiac Surgery |
-32 |
-21 |
| Others: |
| Podiatry |
+24 |
+19 |
| Optometry |
+15 |
+11 |
| Chiropractic |
+14 |
+6 |
| Suppliers |
+14 |
+25 |
Option I: Direct costs, work and malpractice (percent change)
Option II: Pass through (percent change)
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