Practicing Physicians Advisory Council (PPAC) UpdateDate: Monday May 26, 2003 I am pleased to post my report of the Practicing Physicians Advisory Council meeting of May 19, 2003. The Practicing Physicians Advisory Council (PPAC) is a congressionally designated committee of 15 physicians to advise Health and Human Services on matters of Medicare and Medicaid. PPAC answers to the Administrator of the Centers for Medicare and Medicaid Services (CMS), Tom Scully. Medicare Fee Update Once again, the main topic was the fee update. Although Congress provided a one year fix for 2003, the projected change for the 2004 fee schedule is minus 4.2%. The AMA was represented by Board of Trustees Secretary John Nelson, MD, who eloquently protested the continued use of the flawed sustainable growth rate (SGR) formula. The SGR assumes that physicians will increase the volume and intensity of services provided to offset any fee decrease. The CMS actuaries have calculated that the volume and intensity of physician services will increase 8% and that this increase will continue over several years. They do not attribute such increases to the increased demand for health care by seniors or new covered benefits such as screening. Dr. Nelson and written testimony from ACP supported the MEDPAC recommendation to replace the current formula with a system that keeps pace with the increases in the cost of practicing medicine. (MEDPAC is an independent federal body established to advise Congress on issues affecting Medicare.) PPAC's recommendation also supported the MEDPAC calculations of a 2.5% increase rather than a 4.2% decrease for 2004. The Cost of Labor Until Congress acts to change the SGR formula, we are limited to pointing out the flaws in the SGR which could be administratively corrected. For example, the Medicare Economic Index is used to calculate medical overhead, and uses the average increase in pay scale for general labor, 3%, to calculate physician overhead, compared with the increase of 5% for health care workers used in calculating the hospital index. PPAC requested that CMS use the same costs of labor for physicians that they use for hospitals. The Cost of Drugs Expenditures by CMS for drugs administered in physicians' offices (deemed "incident to drugs") continue to be part of the SGR, and therefore contribute to the negative fee update. PPAC again discussed the removal of "incident to" drug administration from the SGR since physicians have no control over the prices of these medications. Site of Services and Demographic Shifts Physicians have been instrumental in shifting the site of services to their offices from the more expensive hospital setting. However, the Part A budget for hospital services is not decreased nor is the Part B budget for physician services increased to reflect this shift. Because more services are now provided in the office setting, the volume and intensity of Part B services increase and trigger the SGR target which lowers the conversion factor and therefore lowers physician fees. PPAC felt that physicians should not be penalized for overall cost savings for CMS, and recommended that CMS should consider transferring the money from Part A to Part B to reflect the change in sites of service. PPAC also felt that physician fees should not be decreased because of increased services used by an aging population with chronic illnesses. We recommended that the actuaries provide data on the effect of demographic changes (population aging) and increasing numbers of people kept alive with chronic illnesses on volume and intensity of physician services. This will be a future agenda item. CMS actuaries comment that they feel part of the increase in volume and intensity of services is related to physicians billing higher codes. PPAC pointed out that the E & M coding project shows no such upcoding. Access to Medicare Services CMS is still measuring patient access through physician Medicare participation rates. We pointed out that increasing numbers of physicians are limiting the number of new Medicare patients they take, while accepting assignment for better rates, ease of claim submission and to avoid checks going to patients. CMS also measures the difficulty of access to services by Medicare patients by the number of people calling the 1-800 Medicare Hotline. However, we felt there was not sufficient data about the number who would call Medicare rather than just complain to physicians about difficulty with access. PPAC suggested a more accurate measure of access would be examining Medicare case loads per physician and the number of ER visits by Medicare patients. PPAC noted the MEDPAC survey showing a decline in the percentage of physicians not restricting the numbers of new fee for service Medicare patients from 76% to 69% as being very indicative of future trends. It was discussed that a more economical way to predict shortages would be to survey a selected sample of particularly hard hit areas and specialties rather than a random sample of all physicians. Correct Coding Initiatives Tell your billing personnel that it is no longer necessary to purchase a book of coding edits from CMS. CMS will put the current coding initiatives on their website, cms.hhs.gov. Carrier Medical Directors PPAC recommended that rather than surveying carrier medical directors about whether they feel access to them is adequate that CMS survey physicians' offices about their ability to access the Carrier Medical Directors. We also noted that information from local carriers is often inaccurate and requested that CMS improve this situation. Stark II We discussed the planned Stark II regulations. Previously, under Stark I, the Office of the Inspector General interpreted the prohibitions on physician business arrangements broadly and the exceptions narrowly. We welcomed the new decision to reverse this attitude in order to allow physicians more flexibility. PPAC Agenda Finally we discussed how PPAC members could have more input on the agenda and more advance warnings of pending regulations. For example, Medicare is considering re-registering physicians every 3 years and we would have liked the ability to comment on this. CMS was very open to the idea of our increased participation. Feedback I hope this update remains helpful to you. Once again, I was able to use input from many of you. I hope this will increase the utility of PPAC. Please feel free to give me feedback on the actions that PPAC has taken or what our responses to CMS should be for future issues. Thank you for your time in reading this. Sincerely, Barbara L. McAneny, MD, FACP
Official CMS documents for this PPAC meeting: Zip Download |
