Practicing Physicians Advisory Council (PPAC) Update for December 5, 2005I am pleased to send you this update on the December 5, 2005 meeting of the Practicing Physicians Advisory Council (PPAC), a group of 15 physicians appointed to advise the Secretary of HHS on the effects of Medicare and Medicaid regulations on the practice of medicine. PHYSICIAN FEE SCHEDULE Once again the most important topic discussed at the Practicing Physicians Advisory Council was the Final Rule regarding the Physician Fee Schedule. Barring action by Congress, on January 1, 2006, the conversion factor will decrease 4.4% to $36.1770. (The Anesthesiology conversion factor also decreases 4.4% to $16.9591). Unless the lobbying efforts by the AMA and other groups are successful in convincing Congress to make a major revision, physicians will see a 26% further decrease over the next 5 years, while the estimated cost of practice as reflected by the Medicare Economic Index (MEI) will increase 19%. CMS Administrator Dr. Mark McClellan has recently stated that the current system of paying physicians is unsustainable. At the same time, there will be increases of 4.8% for Medicare Advantage managed care plans, 3.7% for hospitals, 3.1% for nursing homes, and 2.8% for home health agencies. The formula that determines the conversion factor is the Sustainable Growth Rate (SGR). The SGR is the product of the estimated change in physician services, the estimated growth of the Gross Domestic Product, the estimated change in the number of fee-for service Medicare beneficiaries, and the estimated change in services due to changes in statutes. The new Medicare preventative and screening services constitute changes in legislated services, and the Final Rule states that the statute provides the Secretary with the clear authority to specify the services which are included in the SGR. However, the CMS actuaries estimated that the added services from all the new benefits only totaled 1.2%. PPAC members felt that with the new screening and prevention services leading to new diagnoses requiring testing and treatments, that this estimate must be low. For example, if the Welcome to Medicare exam finds coronary artery disease, then cardiac testing and intervention is indicated, and the increased volume and intensity of those downstream services should be attributed to the statutory change, and new money should be added to the system to compensate for it. PPAC recommended that CMS actuaries explain to PPAC their methodology for the evaluation of the costs of all the new services downstream from the new screening services, including colonoscopies, Welcome to Medicare Physicals and others. Given that part of the rationale for the increase in payment to the Medicare Advantage plans was the increased services, PPAC also recommended that CMS share with PPAC the methodology used to determine the update to the Medicare Advantage Plans. In the Interim Final Rule for the fee schedule, CMS proposed changes to the methods of measuring practice expense. At the August meeting, PPAC had recommended that implementation of new practice expense methodology be delayed until specialty societies had had time to evaluate its accuracy. CMS accepted this recommendation, with the exception of incorporating data supplied by the American Urology Association. PPAC recommended that CMS change the methodology for the determination of practice expense to one based on measurable data rather than assumptions. Testimony was heard from the PPAC members, and from the AMA, that there will be significant limitations to access to care for Medicare, especially in urban inner city and rural areas, and for certain specialties already facing workforce shortages. At the August meeting, PPAC had requested that CMS develop a plan for an early warning system for problems with access by monitoring critical subsets, such as new Medicare beneficiaries or Medicare-Medicaid dual eligibles. CMS has implemented a strategy to analyze the number of physicians billing Medicare and their case load, the proportion of physicians accepting assignment, and the proportions of new versus established patient visits, and to survey beneficiaries. Data on this will be reported at the next PPAC meeting. PPAC believes that the current and proposed cuts constitute an impending crisis, and therefore PPAC recommended that the Secretary use all the means available to avoid the future decreases in the conversion factors, including but not limited to removing "inicident-to" drugs from the SGR, adding new money to the system for good measurements of practice expense, calculating all the downstream costs from the new screening benefits and working with Congress to create a system where the money for services provided under part B can be shifted from part A where appropriate. CMS maintains that they do not have the authority to retrospectively remove drugs from the SGR, but given the statement in the Final Rule that the Secretary clearly has the authority to determine which factors are included in the SGR, PPAC believes that these changes should be possible, and may avoid some of the coming cuts. Good data shows that the improved care in Part B results in savings on the Part A side, lowering the expenses of hospitals, but increasing the likelihood that the SGR target will be reached and trigger another decrease in physicians' fees. Other changes in the fee schedule include the decrease of the Alaska GPCI from the statutorially determined 1.67 down to 1.017, the exclusion of specialties performing less than 5% of a service from the calculation of the Malpractice GPCI, the expiration of the moratorium on the cap on Physical Therapy services, and a multi-service reduction in the technical fees of specific radiologic procedures. The technical fee reduction provides that certain families of grouped procedures often done together will be reimbursed for 25% less for the second and subsequent procedures this year, and 50% less next year. An example would be CT of the abdomen and pelvis. The CT abdomen would be paid in full, but in 2006 the technical fee for the CT pelvis would be paid at 75% for 2006 and 50% for 2007. Professional fees are unchanged, and interestingly for the hospital side, no reduction will occur. CMS stated that the fees for the hospital side were less than the freestanding centers, so the saving was already accounted for by the hospital cost/charge ratio. PPAC found this to be counter-intuitive, so at the next PPAC meeting, CMS will come back with the data comparing the costs of outpatient versus hospital based radiology services. COMPETITIVE ACQUISITION PROGRAM (CAP) The competitive acquisition program was designed to provide an alternative method for physicians to acquire drugs to administer incident to their office visits. At the last meeting multiple recommendations were made concerning the ability of the vendors to cut off patients from needed therapy if the patients were unable to make their copayments. The Final Rule outlined the process by which the CAP vendors must try to assist patients prior to cutting off therapy, but still gives them the right to do so. It remains to be determined whether a physician who stops treatment when the drugs are cut off is abandoning the patient, and the only recourse to the physician is the appeals process (which may be slow enough to affect patient outcomes), or to drop out of the CAP and treat the patient at a loss. PPAC recommended in August that the prices paid by CAP vendors not be included in the calculation of Average Sales Price (ASP), as the only economically feasible way for a vendor to make any profit on the CAP is if they can purchase the drug for much less than physicians not participating in the CAP. If the vendor price were included in ASP, all physicians would be forced into the CAP. As it is, many oncologists find that even with the 2005 demonstration project augmenting reimbursement for the drugs and drug administration, that delivering chemotherapy is a break-even business. Prompt pay discounts from CAP vendors must be reported, and the cap vendor is responsible for the shipping charges for the return of unused drugs. The Interim Rule for Hospital Outpatient Payment had suggested that hospitals be given an additional 2% over the ASP+6% offered to physicians to pay for pharmacy costs. The Final Rule states that ASP was not intended to cover the handling and storage of drugs, but in order to keep from favoring hospitals over physicians, CMS elected to give hospitals only ASP+6% as well. (Hospitals do get a 4.4% increase in all fees however). Because ASP was not intended to cover the handling and storage of drugs, and because a suggestion was made to add 2% to cover these inventory costs for hospitals, and because there are no codes for inventory/pharmacy services for physician practices, PPAC recommended that CMS re-evaluate ASP +6% as an adequate reimbursement. The current oncology demonstration project ends January 1, 2006, and is being replaced with a demonstration project which will pay oncologists $23 for G-codes billed with an E&M visit. The bill must include a G-code for tumor type (11 tumors are included), purpose of the visit, and whether or not the therapy complies with guidelines. PPAC recommended that the demonstration codes be expanded to include physicians of any specialty who assume primary responsibility for the treatment of the cancer. The CAP program will be implemented on July 1, 2006. PHYSICIAN VOLUNTARY REPORTING PROGRAM (PVRP) This Final Rule implemented a series of 36 G-codes for use voluntarily by physicians, with the program goal of initiating a mechanism to measure physician quality of care, and ultimately to reward physicians for quality of care performance. Currently there is no reimbursement attached to these G-codes, and unlike other demonstration projects it is to apply to all physicians. The codes were derived from the National Committee on Quality Assurance, the AMA Physicians Consortium for Performance Improvement, the Ambulatory Care Quality measures and the Hospital Voluntary Reporting Initiative. The accuracy of these measures, the administrative burden placed on physicians, the lack of validity of hospital measures adapted for physicians, and the potential public reporting and harmful perception of physicians who do not participate make this process problematic. For example, an internist seeing a patient with osteoporosis, diabetes and heart disease would have to report 13 measures using 36 G-codes. Some codes, such as aspirin and beta-blockers "on arrival" for acute MI, and use of internal mammary artery for CABG surgery, are clearly not adapted to office practice. Oncologists would potentially have to report 19 codes on patients with co-morbid conditions such as diabetes, CHF or osteoporosis, on parts of care supplemental to the major focus of an oncologist's work. The amount of administrative work involved for G codes that do not have an attached payment is significant. PPAC recognized that the Physician Voluntary Reporting Program would require additional office staff, significant physician time, training on the G codes, reconfiguration of existing billing software and other expense. PPAC therefore recommended that any effort to implement quality measures and reporting come after physician payment reform is enacted, and current regulatory and administrative demands are reduced. PPAC recommended that instead of implementing the current PVRP demo project, that CMS go to each specialty and determine appropriate scientifically valid measurements adjusted for illness severity, socioeconomic factors, patient compliance, and co-management of patients, and as with the Hospital Voluntary Reporting Initiative program, pay for data collection. As CMS plans to proceed with the PVRP, PPAC also recommended that CMS request input from the appropriate specialty organizations with an interest in the issues already included in this pilot program, and in addition, that CMS reimburse physicians for the data collection. The Council also recommends that CMS work with the NIH and other entities that do clinical trials to determine fair reimbursement rates for data collection, with or without information technology. PPAC recognizes that it is desirable to determine measurements for quality of care, but believes that the current suggestions will not achieve that goal. PPAC recommended that CMS work in conjunction with the developers and certifiers of electronic medical records systems to develop software that includes the quality measures that CMS would like to collect. RECOVERY AUDIT CONTRACTORS PPAC had requested follow up on the Recovery Audit Contractor Program, so it was presented at this meeting. This demonstration project involves CMS contracting with private entities to find billing errors or fraud, and paying those contractors a percentage of the money recovered in repayment. PPAC was concerned that the contractors would focus just on the overpayments, and ignore underpayments. CMS has directed the contractors to look for underpayments, but wished input on how incentives to find and report underpayments would occur. PPAC members noted that there is a cottage industry of consultants who are paid by practices a percentage of the money recovered when the consultants find and successfully rebill Medicare for undercoded services. PPAC suggested that this mechanism would also be advantageous through the Recovery Audit Contractors, as receiving partial payment is better than receiving no payment. PPAC also recommended that the Recovery Audit Contractors meet with the Carrier Medical Directors in the affected three states. We were told that the contractors will not request records if another CMS agency has already done so, but the contractors have found errors in bundling of surgical visits and have issued letters requesting records. PPAC will be receiving updates on the program at future meetings. MEDICARE PART D At the previous PPAC meeting, we had requested information on whether or not the OIG would allow drugs donated by a pharmacy manufacturer's Patient Assistance Program, or other forms of charity, to be considered as part of the patient's true out of pocket expense and count toward the deductible and donut hole in order for patients to benefit from the Part D program. The OIG is working on this, and will issue guidance before the end of the year. PPAC recommended that CMS encourage the OIG to count patient assistance as an out of pocket expense in order to qualify for Part D assistance. PPAC was concerned that the application process for requesting exemptions to the Part D Provider's formularies would be lengthy and complicated, and provide a barrier to physician's willingness to assist patients with appeals. PPAC recommended that CMS develop a common, simplified form to be used by all part D providers, much as it does with the HCFA 1500. However, CMS had already convened a group to look at the feasibility of this, and did not think it had this authority. ELECTRONIC SUBMISSION OF CORRECTED CLAIMS PPAC recommended that CMS allow electronic resubmission for errors denied for minor mistakes and have the Physicians Regulatory Issues Team follow up with us at future meetings. A PERSONAL NOTE PPAC recommended that CMS appoint me to another term on PPAC. If CMS declines, the spring meeting will be my last. I was gratified by the motion, and I have been grateful to be able to provide you with these updates. For at least one more meeting, I will be glad to convey your comments to CMS.
I hope this information is useful. I appreciate any feedback you care to share with me. Please use this covenient online form. I have continued to use many e-mailed comments in discussions with PPAC and find them to be extremely helpful in developing PPAC resolutions and comments. Thank you for your time in reading this. Respectfully submitted, Barbara L. McAneny, MD, FACP
Official CMS documents for this PPAC meeting: Zip Download |
