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New health care act encompasses beneficiary services, quality reporting
The 2006 Tax Relief and Health Care Act provided a freeze in payment rates for 2008 and incentives for quality reporting.
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Before the 109th Congress came to a conclusion, the U.S. Senate and House of Representatives passed the Tax Relief and Health Care Act of 2006, which includes a number of provisions aimed at improving beneficiary services and increasing quality reporting in the Medicare program.
Last year, members of the 109th Congress considered ways to prevent a 5% reduction in physician payment rates that would have gone into effect Jan. 1.
Physician specialty groups had hoped to persuade Congress to legislate a long-term solution to the physician payment update formula – commonly referred to as the SGR (sustained growth rate) – but as the session drew to a close, it was clear that the best Congress could do would be to prevent a fiscal year 2007 reduction to Medicare payments.
The physician community was successful at cultivating support for its proposal among Republican leaders, but it was unclear that there would be the political will to pass a more permanent fix for the SGR, which some said would cost billions, depending on the duration and scope of the fix.
 Alan E. Reider |  Allison Weber-Shuren |
In addition to questions about how Congress would pay for the correction, physician groups were under increasing pressure from the Centers for Medicare and Medicaid Services and then-Administrator Mark McClellan, MD, PhD, to begin providing quality data as part of the Administration’s Pay for Performance initiative to support quality improvement for Medicare beneficiaries.
Many in Congress agreed that averting the physician cut should be tied to CMS’ voluntary reporting initiative, especially given that hospitals, since 2004, have been reporting quality measures to avoid cuts to their inpatient payments.
When the Republicans lost control of Congress in the November elections, the measure hung in peril. However, outgoing House Ways and Means Committee Chairman Bill Thomas, R-Calif., mustered enough political muscle – working with his Senate counterparts – to include the fix as part of a larger tax and energy relief package. And on Dec. 9, Congress passed the legislation, which included a number of other payment adjustments and quality reporting provisions for Medicare providers. President Bush signed the legislation on Dec. 20.
Physician payments and quality reporting
The Tax Relief and Health Care Act of 2006, which took effect Jan. 1, prevents a reduction to payment rates for physicians and other practitioners.
The act also creates a fund to avert potential cuts in fiscal year 2008. Legislation provides a freeze in payment rates as well as a bonus incentive payment for physicians and other eligible health professionals who bill off the physician fee schedule and who report quality measures for covered professional services furnished between July 1 and Dec. 31, 2007.
Physicians who elect to participate in quality reporting — as part of the CMS Physician Voluntary Reporting Program (PVRP) – may submit three or fewer “consensus-based” quality measures to qualify for a single consolidated incentive payment. Physicians must submit at least 80% of cases to qualify.
Revisions to the PVRP or changes to quality measures for a specific physician specialty will be consensus-based and endorsed by the National Quality Forum and the Physician Consortium for Performance Improvement. The revisions will be based in part on discussions from the AQA alliance meeting that was expected to take place Jan. 22.
Any changes to the PVRP will be posted to the CMS Web site by April 1. Participating physicians (or eligible employers or facilities) will receive a 1.5% bonus for all billed services provided during this period.
The legislation provides $1.35 billion in funds for the Physician Assistance and Quality Initiative Fund. In this budget neutral environment, this funding triggered a reduction to the Medicare Advantage Stabilization Fund, established under the 2003 Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) to encourage managed care organizations to remain in the Part C program.
CMS will publish a proposed set of quality measures by Aug. 15 for use starting in fiscal year 2008. After securing public comment, a final set of measures is to be published by Nov. 15. It is likely that regulatory guidelines will allow physicians to provide quality measures through an appropriate medical registry, such as the existing Society of Thoracic Surgeons National Database. CMS will use the taxpayer identification number as the billing unit for identifying eligible professionals but will explore other means to identify professionals in 2008.
Extension of work component
The Tax Relief and Health Care Act of 2006 also extends a floor on the work component of the physician geographic adjustor in fiscal year 2007 to raise payments for rural localities for which the work geographic index is less than 1%. This provision is already included in the MMA but is set to expire in 2007.
Hospital and ASC reporting requirements
The act provides for voluntary quality reporting for hospital outpatient services and ASC services that elect to provide quality data in fiscal year 2009. Hospitals and ASCs that choose to report will receive a full update; those that do not will have their update reduced by 2%.
As with physician reporting systems, CMS will develop consensus-based quality measures for hospital outpatient departments and ASCs.
CMS is expected to begin this process by looking at approved quality measures for hospital inpatient care units that may be applicable to outpatient departments and ASCs. In the case of existing inpatient hospital measures that have been shown not to represent the best clinical practice, these will be eliminated and replaced with new measures.
Hospital outpatient data will be made public as part of the Hospital Compare Web site (www.hospitalcompare.hhs.gov/hospital/home2.asp). According to a statement by the House Committee on Ways and Means, approximately 96% of inpatient acute care hospitals are voluntarily reporting quality measures to CMS.
For more information:
- Amy J. Demske is Government Relations Director at Arent Fox LLP. She can be reached at 1050 Connecticut Ave. NW, Washington, DC 20036-5339; 202-857-6484; e-mail: demske.amy@arentfox.com.