Congress Urges CMS to Alter
Inputs to Medicare SGR Update Calculations
Michael Scott, J.D., Director
Governmental and Legal Affairs
Following the lead of House Ways and Means Chair
William M. Thomas (R-CA) and Health Subcommittee
Chair Nancy L. Johnson (R-CT), 238 Representatives
and 75 Senators have signed on to letters urging
Centers for Medicare & Medicaid Services (CMS)
Administrator Mark B. McClellan, M.D., Ph.D., to
revise current Administration practices by which
the annual physician update under the Medicare Sustainable
Growth Rate (SGR) formula is calculated. Most significant
of the requested changes is removal of outpatient
prescription drugs from the calculation of spending
on physician services; physician-prescribed drugs
are not among those items included in the statutory
definition of “physician services” for
SGR purposes.
The letters from the two bodies were substantively
identical; a copy of the longer Senate
letter
was sent forth and signed by 73 Senators. Both covered
many of the same points raised by Representatives
Thomas and Johnson in a letter made public in early
May. More recently Senate Finance Committee Chair
Charles E. Grassley (R-IA) and Ranking Member Max
Baucus (D-MT) followed suit with their own letter
to Dr. McClellan. Along with the House Energy and
Commerce Committee, the House Ways and Means and
Senate Finance committees have jurisdiction over
Medicare physician reimbursement issues.
In addition to questioning the inclusion of prescription
drugs in the SGR spending calculation, the letters
also took issue with whether CMS, in determining
“target spending,” takes full account
of changes in law, regulations and coverage decisions
as required by the terms of the statutory formula.
Failure to fully account for these items essentially
means that the target is set at an artificially
low level, thus almost assuring that physician service
volume will exceed the target and further trigger
negative updates.
Congressional interest in these issues has been
heightened by recognition that something must be
done to revise the formula itself, most likely in
2005. As previously reported, the Medicare trustees
have projected that unless the formula is amended,
physicians will face negative 5-percent reimbursement
cuts each year through 2012 — a state of affairs
almost certain to cause severe access problems for
Medicare beneficiaries seeking physician care. Changes
in CMS’ calculation methods, as suggested
by the congressional letters, would serve to substantially
lower the budgetary cost of 2005 legislation revising
the formula itself.
Of particular interest to anesthesiologists, any
Medicare legislation revising the SGR formula could
represent the vehicle for dealing with the current
disparity in Medicare reimbursement for anesthesia
services in comparison to reimbursement for the
rest of medicine.
As noted in last month’s column, Rep. Johnson
and Fortney H. “Pete” Stark (D-CA),
respectively, chair and ranking member of the Ways
and Means Health Subcommittee, have written to the
General Accounting Office requesting a review of
this issue and asking whether there is resulting
evidence of impaired access to operating room services
for Medicare beneficiaries. The GAO report is expected
by the end of 2004.
One-Time Reallocation of
Graduate Medical Education Slots Proposed
Included in the FY 2005 hospital payment proposed
rule published May 18 by the Centers for Medicare
& Medicaid Services (CMS) is a proposal to reallocate,
on a one-time basis effective July 1, 2005, unfilled
hospital residency slots for federal support purposes.
CMS estimates that there are approximately 3,000
unfilled slots nationwide.
Depending on the number of slots that are freed
up (hospitals will be permitted to apply for an
exception from reallocation of slots for various
reasons), hospitals seeking additional residency
slots will be permitted to apply for an increase
of up to 25 slots by application on or before December
1, 2004. CMS proposes that priority in reallocation
be given to teaching hospitals in rural and small
urban areas as well as for those residency programs
that are the only such program in a given state.
Because of the proposed limitations on CMS approval
of reallocation, it appears doubtful that the one-time
event will generically benefit anesthesiology, for
which additional residency slots may be necessary
to accommodate the proposal, now under consideration,
to seek approval of a four-year residency continuum
by the Accreditation Council for Graduate Medical
Education.
One aspect of the CMS proposed rule will, if implemented,
clearly benefit some anesthesiology residencies.
At present when a medical student simultaneously
matches into a one-year internal medicine residency
followed by a three-year anesthesiology residency,
CMS currently supports only three and one-half years
of training, essentially because the initial residency
program requires only three years. CMS proposes
to give recognition to the requirements for an anesthesiology
residency and provide support for the full four
years. ASA expects to file a letter of comment supporting
this change.
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