Fee cuts affect dermatologists less than others

October 21, 2005

An overall 4.3 percent 2006 Medicare fee cut announced in March is something other physicians will need to worry about, but not dermatologists.

Therefore, an overall 4.3 percent 2006 Medicare fee cut announced in March is something other physicians will need to worry about, but not dermatologists.

The reason: the Centers for Medicare & Medicaid Services (CMS) has accepted new PE survey data provided by AADA, showing that actual practice expenses are significantly higher than values used by CMS to determine reimbursement rates for dermatology procedures.

It is important to note that although dermatology payments on the whole will increase because of the new survey data, individual CPT codes could have an increase or a decrease in payment, depending upon how the data affects each code.

Problems with existing formula

The agency's decision to accept the new numbers from AADA came as the association, along with other specialty groups, pushed for elimination of the Sustainable Growth Rate (SGR) formula in determining Medicare fees. One of the problems, the groups contend, is that Part B drugs are included in the SGR formula, and their rate of growth in cost is beyond the control of physicians.

"If Part B drugs are removed from the physician payment baseline, forecasted cuts would not be as steep or as enduring," declared a letter to Joshua B. Bolten, director of the Office of Management and Budget, signed by 89 senators. "We support removal of Part B drugs from the SGR formula from the base year. There has been consistent bipartisan support for administrative action to implement such a change."

The senators went on to say that Congress needs to enact a long-term solution, and that administrative changes would make that possible.

"We urge you to use the authority of your office to approve this administrative action," the senators said.

AADA supports formula change

Meanwhile, AADA is supporting provisions of HR 3617 by Rep. Nancy Johnson, R-Conn., chairwoman of the House Ways and Means Subcommittee on Health. These provisions would abolish the SGR formula and replace it with the Medicare Economic Index (MEI). The result would mean a 1.5 percent fee schedule increase, rather than the anticipated overall cut of 4.3 percent.

In February, William F. Gee, M.D., a urologist speaking on behalf of the Alliance of Specialty Medicine - of which AADA is a member - urged Congress to remove inequities from the SGR formula, warning that failure to do so would result in reductions of roughly 5 percent each year from 2006 to 2012, with rates not returning to their 2002 level until well after 2013.

"In other words, physicians will receive less reimbursement in 2013 than they did in 2002 for the exact same procedure, regardless of inflation and increased practice costs," Dr. Gee told the House Ways and Means Health Subcommittee in testimony Feb. 10.

Dr. Gee pointed out that a 1.5 percent increase was mandated by Congress for 2004 and 2005 to account for problems with the SGR, but added that Congress failed to act on the underlying problems in the formula.

Rep. Johnson's bill, the Medicare Value-Based Purchasing for Physicians' Services Act of 2005, also includes provisions that would encourage physicians to submit quality and efficiency (Q&E) data to CMS. Physicians who do not report data would receive 1 percent less than those who do.

Pay for quality, not quantity

Under the bill, Q&E data would include a mixture of outcome, process and structural measures. Some specialty society groups that are members of the Alliance of Specialty Medicine are backing the bill, while others are concerned about those provisions being overly burdensome for physicians.