Practicing Physicians Advisory Council (PPAC) Update for November, 2004It is my pleasure to share with you my report on the November 17, 2004 meeting of the Practicing Physicians Advisory Council, a group of 15 physicians from across the country who advise the Centers for Medicare and Medicaid Services (CMS) on the effect of Medicare policy on the practice of medicine. PHYSICIAN FEE SCHEDULE The final rule of the physician fee schedule was published in the Federal Register, and confirmed the 1.5% update and the conversion factor of $37.8975. Drugs remain in the calculation of the Sustainable Growth Rate Formula (SGR), and are 9% of the allowable charges for 2005. We had asked that drugs be removed, retroactively to the year SGR was initiated, but CMS felt this would not change the situation we face in 2006. CMS feels that the conversion of drugs given in a physician office from Average Wholesale Price (AWP) to Average Selling Price (ASP) should lower the effect of drugs on the SGR. We had requested that the Office of the Actuary report to us on the assumptions they use in determining the Medicare Economic Index (MEI), as they use apartment rent, and general labor markets salaries rather than medical worker salaries. In the federal register, there was comment on the rebasing of the MEI, the use of multifactor productivity instead of labor productivity, and the increase of the Professional Liability Insurance (PLI) factor from 3.2% to 3.9%. However, we did not get an explanation of why for physicians, CMS uses the MEI while for the Hospital Outpatient Prospective Payment System, published at the same time, CMS uses a "Market Basket " of costs of goods and services which result in yearly increases to hospitals of around 3.3%. PPAC requested that CMS and the Office of the Actuary compare and contrast the factors in the MEI and in the Market Basket to explain why the same index cannot be used for physicians and hospitals. We feel that since we are competing for the same goods, services and trained personnel as hospitals, the playing field should be level. The SGR as it currently stands will result in a 5% per year decrease in physician fees yearly for six years starting in 2006, so it must clearly be revised. We felt that one of the flaws in the SGR is the MEI and that we must start immediately looking at alternative methods of calculating physician expense. Removal of the physician administered drugs from the SGR, if the recalculations are retrospective to the initial formulations, is still of the utmost importance in fixing the system, and PPAC continues to advocate for that change. There was also discussion as to the calculations used for updating the professional liability (PLI) component of the formula. CMS is using actual 2001 and 2002 data and projected 2003 data as these are the most current available claims-made data, and capture the publicized trends, but had difficulty getting companies to release their fees. PPAC requested a report on whether the OIG or other sources might have more current data to help adjust for the rapid changes occurring in PLI premiums. CMS pointed out that the PLI component only accounts for 3.9% of the SGR with 52.5% being physician work and 43.6% being practice expense. CMS has removed the liability costs of assistant surgeons from the calculation as that was artificially lowering the rates. NEW BENEFITS IN THE MEDICARE MODERNIZATION ACT CMS has valued the Welcome to Medicare Exam at 1.51 work units, which correlates with a intermediate visit 99203, and will use a code of G0334 for the exam and G0336 for the EKG. 200,000 new beneficiaries will be eligible every month, but only for the first six months of their acquiring Medicare. All designated services must be provided to bill these codes, including the history and physical exam, social history, evaluation of safety at home, the EKG, evaluation for depression, and a written plan for the other preventative services. (Be sure that if there is no access to EKG in the office that the patient gets it done. The code will be denied if the patient fails to get the scheduled EKG!) Covered benefits include screening mammogram, pap smear and pelvic exam, prostate screening, colorectal screening, diabetes outpatient self-management training services, medical nutrition for diabetes and renal disease, bone mass measurements, glaucoma screening, hearing impairment and cardiovascular lab tests (lipids, but not LDL, and only every five years), and diabetes screening labs. Co-pays are required, and if there is a medical problem to be addressed at the same visit, an office visit up to a level 2 can be charged at the same time. PPAC was concerned that there are not enough primary care physicians to do all these exams, but CMS felt these were services already being provided. PPAC also was concerned that with the availability of physicians, that it would be hard to get the patients seen in the first six months of entering Medicare, but that time frame is in the statute, and cannot be changed. Front office staff time may have also been underestimated, as scheduling all these tests, and documenting follow-up, may be difficult. CMS will monitor these new services. INFUSIONAL DRUGS INCIDENT TO PHYSICIAN SERVICES Average Selling Price (ASP) will be paid for chemotherapy and other drugs infused or injected in a physician's office, but the prices which will be used starting Jan 1, 2005 will be based on the last two quarters of 2004, and have not yet been published. This leaves physicians with little time to plan. The new administration codes (G codes this year, and permanent codes when published in the CPT book) will help to a small degree with the practice expense incurred in infusing and injecting drugs, but does not offset the expenses previously covered by the drug mark-up, such as symptom management, etc. For 2005 only, the Secretary has established a pilot project for patients receiving chemotherapy intravenously to measure fatigue, nausea and pain. PPAC felt that this pilot project should be available to all specialties treating cancer, by any means of administration. PPAC remains concerned that the ASP, which is an unproven methodology, may turn out to be inaccurate, especially since the prices given to hospitals and HMOs are included in the ASP calculation. We felt that CMS needs to have a back-up plan if it turns out that a physician is unable to purchase a drug for ASP. If ASP is adjusted quarterly, and physicians purchase the drug for more than they are paid for it, a practice could have lost a significant amount of money providing that drug for those three months. PPAC recommended that CMS institute a process to receive information from physicians of all specialties if they are unable to purchase drugs at ASP, and to have a process for instituting a change in ASP before the end of the quarter and to make the changes retroactive to the beginning of the quarter. PPAC also recommended that since CMS has to compile a list of drug prices by manufacturers in order to determine ASP, that the list also be made available on their website so that physicians can purchase drugs at ASP. CMS feels that the current changes in reimbursement for the administration of the incident to drugs will be adequate, but expressed willingness to discuss this with Congress if access is affected. CMS stated that PPAC's opinion would be valued in the development of the competitive bidding process for incident to drug delivery in 2006. Oncologists and other specialties are very concerned about the viability of this untested system. PPAC passed a resolution pointing out that the CMS policy of paying for the least costly alternative when two drugs can be used for the same indication is not a market based solution, but is a form of price fixing, and should not be CMS policy. This policy is not enforced equitably by the carriers, and PPAC requested that CMS evaluate the current application of the Least Costly Alternative policies. Vaccine administration reimbursement was increased from $8 to $18. PROVIDER ENROLLMENT AND CHAIN OWNERSHIP SYSTEM (PECOS) CMS has worked very hard, and authorized extra funds to expedite the enrollment of physicians in Medicare, and announced that they are almost caught up. PPAC is still very interested in helping to pilot the process of registering physicians for the National Provider Identifier, in hopes that we can assist CMS to avoid the problems encountered with PECOS. PPAC still requests that CMS have an online, user-friendly system which can enroll physicians in less than 60 days. OBSERVATION STATUS PPAC heard discussion about the appropriate use of Observation status, as many hospitals had difficulty obtaining payment if an admitted patient was changed to observation status. Admitted patients are paid under Part A but Observation is Part B. We were assured that only the lab tests generated, not the entire outpatient service, were considered in calculating the volume and intensity of Part B services, leading to a trigger of the SGR cap. The National Uniform Billing committee has given instructions that if a patient is admitted, the status can be changed to observation if done while the patient is still in the hospital. PPAC recommended that CMS provide to physicians a clear educational document on the concept of Observation versus Admission. PHYSICIAN QUALITY IMPROVEMENT PROJECT CMS remains very committed to the transformation of physician charts to electronic format, in hopes that this will improve patient safety. The QIO is developing the infrastructure for a four state pilot project to look at the costs and benefits of an EMR. The pilot will include help with the decision making process of adoption of an EMR, the implementation process, and the use of systems management. They are intending that the pilot provide useful information for care management systems, patient self care systems, and quality reporting. The physician offices in the pilots will be eligible for additional payments if IT systems are adopted. Pay for Performance is the long term plan of CMS, but this is still budget neutral. If some physicians are paid more, others will be paid less, so the decision of what constitutes quality performance is critical. PPAC felt that cost remains the major barrier to the adoption of EMRs, but the availability of good systems, and the difficulty of transformation from paper to electronic systems are additional barriers. PPAC also voiced concern that in patient safety projects, where the first step is to discover the errors that are currently occurring, there is little protection from lawsuits. Other suggestions for quality improvement were that immediate feedback is necessary to change physician behavior, rather than a report at a later date. PPAC also advised any assisted decision making programs label the options for care as "respectable" and "acceptable", rather than as "best", This will avoid setting physicians up for increased liability when a care plan other than the suggested one is used. FUTURE AGENDA ITEMS PPAC continues to wish updates on the SGR calculations, as compared to the hospital outpatient prospective payment system. PPAC is also concerned with the plans to contract with Medicare Administrative Contractors, instead of the carriers and fiscal intermediaries. We wish to understand the elements of the contracting process, and how this will affect the Carrier Advisory Committees, and access to Carrier Medical Directors.
Thank you for your time in reading this. Respectfully submitted, Barbara L. McAneny, MD, FACP
Official CMS documents for this PPAC meeting: Zip Download |
