Medicare fee reductions halted; fight for physician rights continues in 2003

Congress has halted the next scheduled 4.4% Medicare fee reduction for 2003. Language allowing the CMS to change any errors was approved in mid-February.

WASHINGTON – The landmark legislation for fixing the Medicare fee schedule was passed as part of a massive spending bill called the FY 2003 Omnibus Appropriations Bill and allows the Centers of Medicare and Medicaid Services to make corrections to 1998 and 1999 projection errors.

“The language in this bill will permit CMS to correct these errors and improve Medicare payments by $54 billion over the next 10 years,” said Catherine Cohen, the American Academy of Ophthalmology’s (AAO’s) vice president for governmental affairs.

A priority for the AAO and the American Academy of Cataract and Refractive Surgery (ASCRS) has been getting Congress to halt the cuts in Medicare scheduled for this year. Fixing the Medicare reimbursement formula, Medicare reform and liability reform are among many priorities on ophthalmology’s legislative agenda for 2003.

Cut halted

In January, the AAO and ASCRS announced an emergency measure had been proposed and drafted by Senators Charles Grassley, R-Iowa, and Max Baucus, D-Mont., to delay the implementation of the 2003 fee schedule until Sept. 30. In the House Ways and Means Committee, Chairman Bill Thomas, R-Calif., introduced House Joint Resolution 3 to keep the 2002 fee schedule untouched for another year.

Physician groups, such as the AAO, ASCRS and the American Medical Association (AMA), have provided legal opinion that the CMS has that authority. Language prohibiting retroactive lawsuits was included in the House bill passed last year, but it died in the Senate. In addition, the Medicare Payment Advisory Commission (MedPAC) has recommended a 2.4% increase for 2004. The CMS had acknowledged errors in the data used to calculate the update and had delayed the implementation of the 4.4% fee fix reduction until March 1.

Correcting the two errors would increase Medicare spending for physicians by $54 billion (of that amount $2 billion is for ophthalmology alone) and would contain statutory legislation protecting the CMS from lawsuits pertaining to past reimbursement errors.

In President Bush’s State of the Union address, he promised $400 billion over the next 10 years for reforming Medicare. Medical liability reform was also at the forefront in medicine. The President’s address, in addition to a majority Republican Congress, may add support to physician issues this year.

“Fixing the formula to truly and correctly represent physician cost and to provide care is our number-one priority,” said Nancey McCann, director of government relations for the ASCRS. Changing the formula is the next step in this process for ASCRS, she said.

GOP control and physician issues

With the election of Sen. Bill Frist (R-Tenn.) as a physician and majority leader of the Senate, a Republican-controlled Congress may favor physician issues. The 108th Congress still faces similar challenges as last year in approving legislation. The Senate still needs a 60-vote majority, Ms. Cohen said. Regardless, she was hopeful about a resolution to fee fix.

“The White House has become a champion for the fee fix especially when they looked at the data from the survey we did with the AMA … however, they’re also being conservative about the budget and don’t want anything else attached,” Ms. Cohen said.

Several senators have wanted to add benefits for hospitals and home health to the fee fix agenda, which partially delayed any resolution to it, she said. It is important to differentiate this bill from a government “giveback” in which lost funds to providers would be reinstated, she said. Instead, lobbyists are emphasizing on correcting the sustainable growth rate (SGR) formula errors.

“Just fixing the errors would wipe out the cut for 2003,” she said. “Beyond that, we’ve asked them to take out the drug cost from the SGR formula because we think legally that’s not appropriate. We’ve funded a legal opinion to take the pharmaceutical cost out of the formula, which is another one of the reasons causing it to go negative. We may still have a fight on our hands for a fair update for 2004,” Ms. Cohen said.

Private contracting: Opting out

Prior to congressional action to halt the fee reduction, physicians opting out of Medicare was a growing fear, though their ability to do so is limited. Physicians can opt out of Medicare entirely and bill their patients for an amount they have established. This option is difficult for ophthalmologists, since a majority of their patients are Medicare beneficiaries. Under the law, patients who receive services from physicians who opt out may not submit those claims to Medicare. Physicians must opt out for a minimum period of 2 years.

Patient rights

Ms. McCann said the President is expected to prioritize healthcare in his domestic agenda. In the State of the Union address, President Bush said he wanted better patient access to health insurance and physicians. He said he supported actions to empower the medical profession and their patients in obtaining necessary treatments. The President also said he supported Medicare beneficiary access to preventive medicine and new drugs.

Ms. McCann said legislation has been reintroduced that includes the patient protections, which is Title I of the two bills that passed the House and the Senate. Title I includes the patient protections. She said there may be an attempt to include this in some other piece of moving legislation, perhaps even liability reform.

Though there are many plans for healthcare, the possibility of war and a volatile economy threaten to overshadow the domestic agenda, said Priscilla E. Perry, MD, ASCRS Government Relations Chair.

“Little has been implemented in healthcare legislation though there were several initiatives since the [President’s economic] summit. One example was the House bill on torte reform was never considered by the Senate,” Dr. Perry said.

She hopes the election of Sen. Frist may weigh more heavily in getting healthcare issues on Congress’ agenda.

Liability reform: Physicians vs. patients

More recently, soaring malpractice premiums have led surgeons in other specialties to opt out of medicine. Surgeons have threatened or had walkouts across the nation. They have even temporarily closed certain units showing their desperateness with malpractice insurance. The specialties hardest hit have been obstetrics, emergency medicine, neurosurgery and orthopedics, said Allison Weber Shuren, JD, an attorney for Arent Fox following the issue closely.

“On malpractice reform, the AMA is counting on votes from the Senate, and they look a little better than in the last Congress,” Ms. Cohen said.

Last year, the House passed legislation (H.R. 4600) to cap jury awards at $250,000, a measure several states are taking on themselves. As with the fee fix, the bill was killed in the Senate. The issue has become such a crisis on its own, however, Congress has not needed much lobbying effort to get involved, Ms. Shuren said.

“Ophthalmology is affected for slightly different reasons. When malpractice insurers look at their risk, a higher volume means more risk,” she said.

For that reason, subspecialty medicine may not be as affected since there is less volume. Contrarily, cataract and refractive surgery, considered safe, carry higher premiums because of the amount of procedures done, she said.

The current resolution for many of the affected states is the capping of jury awards. In Pennsylvania, lawsuits must be heard in the county they occurred to prevent redistricting to an area where awards are more prevalent. Other solutions, such as, pooling funds from licensure fees have either been done or are being considered. Florida began pooling fees when obstetricians were denied insurance a few years ago.

Ms. McCann said she expected Congress to move on liability reform “soon,” although the resolution that may be passed may be “weaker” than what was originally introduced.

New issues: Contact lenses, plano devices, vision caucus

Some new issues that may emerge on the congressional healthcare agenda are a contact lens prescription release, Food and Drug Administration (FDA) regulation of plano devices and the initiation of a vision caucus, Ms. Cohen said.

The AAO has been negotiating with the Commerce Committee on their legislation mandating the contact lens prescription release. Like the mandate for eye glasses, ophthalmologists and optometrists would be required to give a patient’s contact lens prescription after a fitting so the patient can find a better price if they wish, she said.

In regards to plano devices, the FDA is committed to regulating the devices as an ophthalmic device. Though they have no diopter power and are only cosmetic, they must be prescribed by a practitioner. If the FDA does not regulate the lenses, Congress is prepared to regulate them as medical devices, she said.

Regulatory issues

Evaluation and Management guidelines, regulatory reform, Medicare changes and a new glaucoma detection benefit are on the regulatory agenda for the AAO. They are working for the approval of several Current Procedural Terminology (CPT) codes to be announced later this year. Evaluation and Management help protect physicians from audits from misinterpreting complex guidelines, Ms. Cohen said.

The advisory committee on regulatory reform has recommended that the CMS eliminate the Evaluation and Management guidelines as part of regulatory relief.

“CMS has basically said to the doctors that they no longer care about this because it doesn’t seem to have any impact on fraud and abuse, and to do whatever protects them in an audit. That could result in a big change for medicine,” she said.

Contrarily, the CMS is tightening their reimbursement fees for ambulatory surgery centers (ASCs). The CMS has reported overbilling from ASCs for multiple procedures. MedPAC has recommended the CMS for a potential rate freeze.

A rule expanding the number of procedures permissible in an ASC is a possibility this year, said Pamela Johnson ASCRS’s manager of regulatory affairs.

“They haven’t looked at what procedures can be done safely in ASCs. That’s overdue to be updated,” Ms. Johnson said.

In addition, the CMS has changed Medicare practice expenses to resource-based expenses. The issue arose in 1997 and the AAO and ASCRS have been intervening since. Practice expense cuts were modified gradually over 4 years. This is the first year with fully implemented practice expense guidelines; 45% of procedural costs is based from Medicare practice expense data. They are now reviewing the codes and the specialties have to defend their costs. Ophthalmology has about several hundred codes that will be evaluated as part of Medicare’s data refinement effort, Ms. Cohen said.

The AAO and the NEI are working on a new glaucoma detection outreach program. Their goal is to educate at-risk groups, such as, African-Americans, about the disease, she said.

For Your Information:

• Catherine Cohen, AAO Vice President for Governmental Affairs, can be reached at 1101 Vermont Ave. NW, Suite 700, Washington, DC 20005; (202) 737-6662; fax: (202) 737-7061; e-mail: cgcohen@aaodc.org.
• Nancey McCann, ASCRS Director of Government Relations, and Pam Johnson, of regulatory affairs, can be reached at ASCRS/ASOA, 4000 Legato Rd., Ste. 850, Fairfax, VA 22033; (703) 788-5761; fax: (703) 591-0614.
• Centers for Medicare & Medicaid Services can be reached at 7500 Security Blvd., Baltimore, MD 21244-1850; (410) 786-3000.
• Priscilla E. Perry, MD, can be reached at 1310 N. 19th St., Monroe, LA 71201; (318) 388-2020 fax: (318) 361-0914; e-mail: pperry20@aol.com.
• Allison Weber Shuren, JD, can be reached at Arent Fox Kintner Plotkin & Kahn, 1050 Connecticut Ave. NW, Washington DC 20036; (202) 775-5721; fax: (202) 857-6395; e-mail: Shuren.Allison@arentfox.com.