Physicians face Medicare payment crunch

April 1, 2007

Dermatologists and other physicians who participate in the Medicare program are facing a tighter financial squeeze as federal officials seek to control costs while giving patients more information about the performance of their healthcare providers.

The fiscal 2008 federal budget proposed in early February would slash Medicare by some $75.9 billion over five years. While not directly attacking physician fees, the proposal fails to provide a remedy to structural fee schedule problems that, unless repaired, will result in sizable reductions over the next several years.

Moreover, the budget plan "strives to induce providers toward greater efficiency with payment policies that increase the role of competition and create a strong financial incentive for providers to slow cost growth through greater productivity and other improvements in efficiency," Leslie V. Norwalk, acting Medicare administrator, told House and Senate committees in mid-February.

The Bush budget plan for Medicare met with an icy reception from Democrats who control Congress, particularly in the House of Representatives.

"The President's divisive budget is an exercise in make-believe intended to incite partisanship, not invite policymaking," declared Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means Health Subcommittee.

Rep. Stark said the proposed budget "preempts Congress' annual review of Medicare payment policy, calling for permanent and long-term cuts that even Republican Congresses would be unlikely to enact.

"At the same time," he added, "it fails to address physician payment reform, a significant problem which the Bush administration and previous Republican Congresses allowed to fester and grow."

Sequester reduction proposed

Included in the administration's proposal is a provision that would apply a -0.4 percent sequester to the Medicare payment amount for all providers in the first year that general revenue funding for the Medicare program exceeds 45 percent.

That sequester reduction would grow by an additional 0.4 percent each successive year that the general revenue funding remained above 45 percent.

According to Ms. Norwalk, the plan would reduce Medicare growth from a projected 6.5 percent annually over the next five years to 5.6 percent per year. But Rep. Stark said that provision would end Medicare as an entitlement, and compel across-the-board cuts "that will undermine the quality of healthcare delivered to America's seniors and people with disabilities."

Pushing forward with the PVRP program while the debate intensified on Capitol Hill, CMS published steps on its Web site that physicians should take to be eligible for the bonus payment, which would be made in a single consolidated payment in mid-2008. According to CMS, eligible professionals "who successfully report a designated set of quality measures on claims for dates of service from July 1 to December 31, 2007, may earn a bonus payment, subject to a cap, of 1.5 percent of total allowed charges for covered Medicare physician fee schedule services."

CMS said that by Aug. 15 it will publish a proposed set of quality measures in the Federal Register and a final set of quality measures by Nov. 15. Eligible professionals need not enroll. They can simply participate by reporting the appropriate quality measure data on claims submitted to their Medicare claims processing contractor.

Provider performance data

Meanwhile, on Feb. 15, CMS announced that the Delmarva Foundation for Medical Care, one of its quality improvement organizations, has entered into subcontracts with four regional collaboratives as part of the Better Quality Information to Improve Care for Medicare Beneficiaries (BQI) project.

The regional collaboratives will combine Medicare data with data from other insurers to produce information on the performance of healthcare providers for the benefit of Medicare beneficiaries, CMS said.