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1. Medicare Publishes 2008 Payment Rule; Unless Congress Intervenes, Physicians Will See Significant Cuts
Depending on your practice location, your Medicare reimbursement could drop by up to 19.2 percent next year, a combined result of the 10 percent sustainable growth rate (SGR) cut and the geographic payment updates announced last week by the Centers for Medicare & Medicaid Services (CMS).
As you know, the 10 percent cut is the result of the flawed SGR formula that was supposed to establish a “sustainable” growth rate for spending on doctors’ services. The formula allows Medicare spending on physician services to grow at the rate of the gross domestic product (GDP), but it actually penalizes physicians because the cost of physician services rises more rapidly than the GDP. AMA and CMA have been working vigorously to convince Congress to change the formula and reverse the 10 percent cut scheduled to take effect January 1.
Geographic Payment Cuts
The 2008 physician payment rule also updates the Geographic Practice Cost Index (GPCI) and Geographic Adjustment Factors (GAF) used to calculate Medicare payment rates for all counties nationwide. Unless Congress acts to stop these GAF reductions, most California counties will see geographic payment reductions under this new rule (Santa Clara -9.1 percent, San Mateo -4.4 percent, San Francisco -4.4 percent, Alameda/Contra Costa/Berkeley -3.9 percent, Los Angeles +2.3 percent, Ventura +3.4 percent, Orange +2.1 percent, Marin/Napa/Solano -3.6 percent, Rest of California -0.6 percent).
The 2008 payment rule does not include a fix for California’s specific geographic payment problems. Counties are grouped into Medicare payment “localities,” theoretically with other counties with similar practice costs. Because the payment localities have not been updated in 10 years, many recently urbanized counties remain inappropriately grouped into payment localities along with lower-cost (mostly rural) counties.
As you may recall, CMS earlier this year set forth three options for updating California’s payment localities. The three proposals would have moved higher-cost counties into new or more appropriate localities so that they could be reimbursed based on more accurate geographic practice costs. Unfortunately, the proposed rules were fraught with errors and, because federal law requires changes in the Medicare program to be budget neutral, all three options would have required some localities to suffer payment cuts to offset the increases for the most severely underpaid counties.
CMA was unable to fully support any of the options, as proposed. CMA asked CMS to adopt an option that most closely meets CMA policy developed by the 2006 House of Delegates, which would have updated the payment localities and minimized subsequent payment cuts to California’s rural physicians, but CMS decided that the issue requires “further study and analysis.”
“CMS’s inaction is incredibly frustrating for physicians,” says CMA President Richard S. Frankenstein, M.D. “A locality update is long overdue. CMA will continue to seek solutions to this problem.”
There Is Still Hope
As you may know, CMA is sponsoring federal legislation to fix the geographic payment problems. Because of the bipartisan support for CMA’s sponsored GPCI bills among congressional leaders, California Congressman Pete Stark, chairman of the Health Subcommittee of the House Ways and Means Committee, included a GPCI fix in the legislation that passed the House this summer. The bill would not only update California’s geographic payment localities in 2008, but would also prevent any geographic payment reductions for three years. The bill would also stop the 10 percent SGR cut in 2008 and the 5 percent cut scheduled for 2009, and instead provide .5 percent annual update for two years without creating more SGR debt in future years. These provisions establish a path to long-term reform and allow CMA three years to work with Congress to craft viable alternatives to Medicare’s flawed payment formulas.
The Senate is expected to tackle the Medicare issues before the end of the year. Once it does so, the House and Senate Medicare packages will be reconciled by a joint House/Senate conference committee. Congressman Stark has pledged to continue to champion the geographic locality issue in conference committee.
Click here for more information.
Contact: Elizabeth McNeil, 415/882-3376 or emcneil@cmanet.org.
2. Call Senators Boxer and Feinstein and Urge their
Continued Commitment to Stopping Medicare Payment Cuts
The U.S. House of Representatives, under the leadership of California Chairman Pete Stark, passed a bill in July that would stop the 10 percent sustainable growth rate (SGR) cut in 2008 and the 5 percent cut in 2009, replacing them instead with .5 percent increases in each of those years. The legislation would also update California’s geographic payment localities in 2008 and prevent any geographic payment reductions for three years. The bill provides an unprecedented $22 billion in payment fixes for physicians, without mortgaging this debt into future years.
The January 1 deadline is looming, however, and the Senate has yet to act. Once it does so, the House and Senate Medicare packages will be reconciled by a joint House/Senate conference committee.
Members of the Senate Finance Committee are currently meeting to discuss Medicare physician payments, but they are gridlocked because the new “pay-as-you-go” rules require that all spending increases be offset by corresponding spending reductions or revenue increases.
Both AMA and CMA have proposed paying for these fixes by equalizing Medicare Advantage health plan rates with fee-for-service rates. Currently, Medicare Advantage plans are paid on average 12 percent more than fee-for-service physicians. Bringing plan rates in line with fee-for-service physician rates could save as much as $50 billion.
Both California Senators Barbara Boxer and Dianne Feinstein have been extremely supportive of physicians on this issue. The California senators need to hear from physicians now to help reinforce their efforts with the Senate leadership.
CMA urges all physicians to call, write, or email Senators Feinstein and Boxer and ask them to urge finance committee leaders Senator Max Baucus (D-Montana) and Senator Charles Grassley (R-Iowa) to:
- Stop the 15% Medicare physician payment puts for two years
- Provide a positive physician payment update for two years
- Include a California GPCI fix
Please also thank Senators Feinstein and Boxer for their continued support of physicians.
Click here for more details, including the senators' contact information.
Contact: Elizabeth McNeil, 415/882-3376 or emcneil@cmanet.org.
3. Appeals Court Upholds $33.8 Million Ruling Against
UC for Hiking Professional Degree Program Fees
The University of California (UC) has to give back $33.8 million to 9,000 students who attended its professional schools in 2003, including 2,571 medical students, according to a ruling issued by the California Court of Appeal last week.
In 2006, a California Superior Court judge found the university system in breach of contract for raising tuition and ordered it to pay back the students the fee hikes plus interest.
UC had promised on its website and in its catalogues that professional degree program fees would not be raised for the duration of a student's enrollment and that increases would only apply to new entering students. In 2003, however, fee increases were applied to both continuing and entering students.
For Janet Lee, M.D., the named medical student plaintiff, tuition jumped from $5,000 to $12,673 per year while she attended UCSF School of Medicine.
CMA filed an amicus brief on behalf of the students.
Click here for more information, including a copy of CMA's brief.
Contact: Legal information line, 415/882-5144 or legalinfo@cmanet.org.
4. Department of Education Extends
Medical Student Loan Deferment
The U.S. Department of Education announced last week that it would extend the “20/200” economic hardship loan deferment program for one year, until November 1, 2008. Congress had eliminated the 20/220 pathway on October 1 as part of the College Cost Reduction and Access Act of 2007, which would have meant that thousands of medical residents currently relying on the loan deferment program would have been forced to immediately begin making extremely large loan payments or go deeper into debt at a time when they are still in training. A new income-based loan repayment program created by the new law does not take effect until July 1, 2009.
The one-year extension allows fourth-year medical students and current residents to reapply for economic hardship deferment during the next year, and it provides time for CMA and AMA to pursue long-term legislative solutions to this problem. Legislation was introduced last week that would permanently restore the 20/220 pathway.
For the average resident earning about $43,000 a year and carrying a debt burden of more than $130,000, the 20/220 pathway has been invaluable. Up to 67 percent of entering residents qualify for economic hardship deferment under the program, allowing them to postpone payment on federal loans for three years without accruing interest on the subsidized portion of those loans. Residents qualify if their debt burden is greater than 20 percent of their income, and if their income minus their debt burden is not more than 220 percent of the federal poverty level.
Under the new program slated to take effect in July 2009, loan repayments would be capped at 15 percent of the borrower’s income that is above 150 percent of the federal poverty level.
Click here for more information.
Contact: Adam Dorsey, 916/551-2056 or adorsey@cmanet.org.
5. Possible Breakthrough in Health Reform Discussions
Seeking to end the health reform stalemate, the Legislature’s democratic leaders this week issued a new health reform proposal, which would provide health insurance for California’s 6.8 million uninsured. The most significant concession in the new proposal is that it contains an individual mandate requiring all Californians to have health insurance.
The new Democratic proposal would require employers to dedicate up to 6.5 percent of their payrolls to cover employee health care or pay into a state-run insurance purchasing pool. It also includes a $2-a-pack tax on tobacco to help pay for expanded coverage.
“Using tobacco dollars to pay for expanded access to health care for Californians is the kind of breakthrough commonsense proposal we’ve been looking for this year,” says CMA President Richard S. Frankenstein, M.D. “This proposal signals a real commitment by legislative leaders to find a way past the current stalemate on health care.”
Click here for more information.
Contact: Dustin Corcoran, 916/444-5532 or dcorcoran@cmanet.org.
6. United Healthcare’s New Preventive Health Care
Payment Policy Takes Effect December 8
United Healthcare has agreed to begin paying physicians separately for acute care services provided during a preventive medicine visit. The policy change, effective December 8, allows for partial payment (50% of contracted rate) of a problem focused evaluation and management (E&M) service when performed on the same day as a preventive E&M service for the same patient. Currently, United only reimburses physicians for one of the two procedures. CMA and others in organized medicine have been advocating for a change to this unfair payment policy for years.
Although this new payment policy was first announced in December 2006, its implementation has been repeatedly delayed. At CMA’s urging, United has agreed to make the new policy retroactive. Claims with dates of service of October 15 to December 7 will automatically be reprocessed. CMA does, however, encourage physicians to run their own reports and identify affected claims to ensure all claims are paid appropriately.
Click here for more information.
Contact: CMA’s reimbursement help line, 888/401-5911 or drice@cmanet.org.
7. Members Needed to Testify at Balance Billing Hearings
The Department of Managed Health Care will hold two public hearings on newly proposed regulations that would prevent noncontracted physicians from billing patients for emergency services. The hearings are scheduled for Nov. 13 in Sacramento and Nov. 14 in San Diego. Both hearings start at 10 a.m.
Physicians interested in testifying at the Sacramento hearing should contact Francisco Silva at 916/551-2887. Physicians interested in testifying at the San Diego hearing should contact Tom Gehring at 858/565-8597.
DMHC is also accepting written comments until November 30. CMA encourages all members to submit comments on these regulations, which attack the future viability of physician practices. They do not address the key underlying problems of unfair contracts, which result in inadequate physician networks and chronic and pervasive underfunding of emergency care by insurance companies. It is critical that regulators understand the severe economic impact that these regulations would have on physicians and the health care system in general. CMA has prepared sample comments and talking points to help physicians communicate this message.
In addition to prohibiting noncontracted physicians from billing enrollees for emergency services (except for copayments, coinsurance, and deductibles), the new proposal creates a voluntary independent dispute resolution process to resolve payment disputes; requires HMOs in the event of a payment dispute to pay physicians an interim amount of 150 percent of 2007 Medicare rates; and modifies the Gould criteria (the nationally accepted standard for determining fair and reasonable payment for health care services) to include Medicare and contract rates.
Click here for more information.
Contact: Francisco Silva, 916/551-2887 or fsilva@cmanet.org.
8. Highlights from CMA’s Board of Trustees
CMA’s Board of Trustees met October 26-29 in Anaheim, before and during the association’s annual meeting.
A summary of the board’s major actions is now available here.
Contact: Ginnie Yee, 415/882-5170 or gyee@cmanet.org.
9. Photos from CMA’s Annual House of Delegates Available
Over 500 photographs taken at CMA’s annual House of Delegates last week in Anaheim can now be viewed online.
Click here to view the photos.
Contact: Katherine Gallia, 916/551-2074 or kgallia@cmanet.org.
10. Member Benefit of the Week: Financial Planning Services
CMA members get $500 off Mercer Advisors’ “Economic Freedom Program,” a comprehensive program that includes financial planning, investment management, and retirement and estate planning.
Mercer Advisors manages over $3.5 billion in assets, most of it for health care practitioners like you. Because Mercer is fee-based rather than commission-based, you can rest assured that Mercer’s financial experts have your best interests at heart.
Members also receive complimentary one-hour consultations. To schedule a consultation, call 800/898-4642.
Click here for more information on your membership benefits.
Contact: CMA's membership hotline, 800/786-4CMA (4262) or lgodward@cmanet.org.
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No. 2117
