Policy Debates Slow Drug Bill Conferees; Most Physician
Items Gain Consensus
Michael Scott, J.D., Director
Governmental and Legal Affairs
“Hours of boredom, moments of terror.”
This phrase, sometimes apocryphally used to describe
the profession by which I am employed, is equally
useful in describing the plight of those who are
paid to divine the progress at session’s end
of congressional conferees on a major piece of legislation.
A shroud of secrecy descends, conferees and their
staffs become inaccessible and only bits and pieces
of reliable (or unreliable) information emerge from
time to time.
Such is the case, as this column is written, with
the landmark prescription drug legislation now in
conference between the Senate and the House. What
we do know is that solutions to major policy differences
— key to gaining passage of a drug bill by
both houses — remain unresolved. Principal
among these are whether, beginning in 2010, the
Medicare fee-for-service program will be required
to compete with subsidized private insurers; whether
a “hard” or “soft” Medicare
spending limit will be imposed; whether Medicare
premiums will vary depending upon the beneficiary’s
income; whether the legislation will include expanded
medical savings accounts; and whether the reimportation
of drugs will be legal.
Underlying most of these issues are the differing
perspectives of elected Republicans and Democrats
on the structure of the Medicare program. Democrats
view Medicare as an “entitlement,” a
government benefit available on equal terms to all
who reach the age of 65. Republicans believe that
the only way to keep the program within manageable
budgetary bounds is to introduce competition and
additional options into the marketplace for seniors’
health insurance.
There is no question but that the American people
expect Congress, tenuously controlled by the Republicans,
to produce a meaningful Medicare drug benefit. House
GOP leaders have characterized the vote on this
bill as the most important politically since they
regained control of that body in January 1995, and
both Republicans and Democrats in marginal states
and districts will have difficulty adequately explaining
their opposition if the bill fails. There is agreement,
moreover, that this year is it: There is no chance
of bringing this bill to a vote in 2004, a presidential
election year when all incumbents run scared if
they are seeking re-election.
This said, what does the bill in its present form
offer physicians and the patients who seek their
services? First and foremost, the House provision
promising a positive Medicare reimbursement update
of 1.5 percent in 2004 and 2005 appears to have
been accepted by the conferees. Adoption of this
provision means that reimbursement of physicians
over the next two years combined will be 10 percent
to 12 percent higher than it would have been if
the Medicare update formula had been allowed to
operate.
Some physician groups are deeply concerned that
the House provision does not go far enough, in the
sense that the positive updates are achieved only
by postponing operation of the Medicare
update formula, and that the situation will become
really ugly when we face a reimbursement “cliff”
in 2006. Considering that Congress passed legislation
early this year permitting the administration to
pump an additional $58 billion (over 10 years) into
Medicare physician payments, however, the House
provision appears to most medical lobbyists as the
best we can expect to get. Fundamental reform of
the update formula, favored by all physician groups,
including ASA, is simply going to have to wait.
Apropos the update formula, the conference committee
bill also is expected to include the concept of
a 10-year rolling average of the gross domestic
product (GDP) changes as one element of calculating
the update, a feature that should serve to flatten
out the peaks and valleys of GDP fluctuation currently
impacting the formula. Although it is not expected
to have dramatic effect on any annual update, physician
groups agree that this change is a positive step.
Many ASA members are aware that physicians and other
providers in rural areas have been pressing Congress
to improve their Medicare reimbursement relative
to urban providers. In the case of rural physicians,
this pressure has principally focused on the physician
work component of the Medicare fee schedule’s
geographic practice cost index (GPCI). We understand
that the conference bill contains a provision by
which all work component values would be brought
up to the median for a limited time (probably three
years, subject to future review) and that this would
not be funded out of payments to those above
the current median. The bill may also contain bonus
payments for physicians practicing in underserved
areas.
The bill is not expected to contain any provision
relating to the future use of ICD-10. This is essentially
because a Health and Human Services advisory committee
has recommended that ICD-10 be adopted only for
current uses (essentially inpatient hospital services),
meaning that Current Procedural Terminology-4™
will continue to be used as the descriptor for physician
services. The bill should also contain a voluntary
approach to the broad introduction of e-prescribing,
with adequate targets for development and thorough
testing of e-prescribing systems. Regulatory relief
provisions, advocated by organized medicine over
much of last two years also, are expected to be
included in the conference bill.
Issues relating to the pricing of outpatient drugs,
limitations on physician investment in specialty
hospitals and possible limitations on payments for
physician services by Medicare + Choice and PPO
plans are currently unresolved.
In recent days, news reports have abounded that
the conference bill would contain a cap on Medicare
spending in relation to general revenues. The best
information at this writing is that any such cap
will be a “soft” cap, meaning that when
Medicare spending reaches a certain percentage of
general revenues (probably 45 percent), the administration
and Congress will be required to consult as to a
possible solution. There are various estimates,
based on current trends, when the 45 percent cap
might be reached, but the mere existence of even
a soft cap will probably represent an added weapon
in the hands who oppose physician efforts to rework
the current Medicare fee schedule update formula.