Opinion: Lawmakers scramble to stall Medicare reimbursement cuts

June 1, 2008

Lawmakers are scrambling to find a solution to a huge problem that stands to affect millions of Medicare patients and thousands of physicians across the nation.

Key Points

Lawmakers are scrambling to find a solution to a huge problem that stands to affect millions of Medicare patients and thousands of physicians across the nation.

Unless action is taken, dermatologists and others who serve Medicare recipients will face a 10.6 percent cut in average reimbursements on July 1, when an emergency extension approved last December runs out.

Now, it appears that another such emergency extension will be needed.

What's required, of course, is reform of the overall formula for determining Medicare reimbursement rates.

Pending legislation

At press time, legislation was being prepared by Senate Finance Committee Chairman Max Baucus (D-Mont.), which would delay that cut for 18 months and increase payments an average 1.1 percent.

The bill would cost about $8.4 billion over five years; halting the cuts without the increase would cost about $8 billion.

Ultimately, physicians would face a payment cut of 21 percent in 2010.

However, Sen. Baucus said he would not permit that catastrophe to occur and that next year, the broader issue of funding Medicare physician pay will be addressed.

During a meeting with physicians in mid-April, Sen. Baucus said he would include other provisions in the bill, including incentives for using electronic prescribing and other types of electronic health records and expanding the Physician Quality Reporting Initiative.

His bill apparently draws from S.2785 - the Save Medicare Act - sponsored by Sen. Debbie Stabenow (D-Mich.), which also would stop the pay cuts for 18 months. It would retain current levels for the remainder of this year, and enact a 1.8 percent increase for 2009.

AMA response

The American Medical Association (AMA) has been pushing hard for this legislation, arguing that reductions like the 10.8 percent cut imposed by the Department of Health and Human Services would sharply reduce access to physician services by Medicare patients.

According to a recent AMA survey, 60 percent of responding physicians said they would have to limit the number of new Medicare patients they treat if payments are cut this year. More than half said that a 10 percent cut in Medicare payments would force them to reduce their staff.

Judicial weigh-in

The Medicare fee schedule battle is only one key concern facing dermatologists and other physicians as a result of potential actions by the federal government.

On March 31, U.S. District Court Judge Rosemary M. Collyer of the District of Columbia issued a preliminary injunction blocking an effort by CMS to prevent physicians from administering anatomic pathology diagnostic testing services performed in so-called "pod labs."

Judge Collyer enjoined the enforcement of anti-markup provisions in the Medicare physician fee schedule rule - published last November - that applied to such services provided in a centralized building.

CMS said it was concerned that arrangements through which physician group practices or other suppliers provide diagnostic testing services and then realize a profit "may lead to patient and program abuse in the form of over-utilization of services and result in higher costs to the Medicare program."

In January, after complaints by physician groups, including the American Academy of Dermatology (AAD), CMS delayed the effective date of its regulation for one year - except for anatomic pathology diagnostic testing services furnished in a centralized building and for the technical component of purchased tests. The injunction does not apply to purchased technical components.

CMS said the delay was needed because the definitions in the original rule "may not be entirely clear and could have unintended consequences."