Medicare Fee Cut Averted by Congress

In early July, Congress acted to reverse a scheduled 10.6% cut to physician fees under Medicare and avert an estimated 5.4% cut that would have occurred in January 2009.

The legislation (H.R. 6331), which passed the House and Senate by veto-proof margins, extends the 0.5% increase in place for the first half of 2008 and provides a 1.1% update for 2009. The bill also includes controversial cuts to the Medicare Advantage program, authorizes increased bonus payments for the Physician Quality Reporting Initiative, and delays implementation of the Competitive Acquisition Program for durable medical equipment.

Days before that, officials at the Centers for Medicare and Medicaid Services released the 2009 Medicare Physician Fee Schedule proposed rule including new measures for the Physician Quality Reporting Initiative, new requirements for physicians offering diagnostic testing services, and plans to reevaluate services and supplies potentially valued incorrectly.

For the Physician Quality Reporting Initiative (PQRI), Medicare's voluntary pay for reporting program, the agency is recommending 56 new measures for 2009, bringing the total number to 175. Officials at the Centers for Medicare and Medicaid Services also are proposing new "measures groups" that allow physicians to report on subsets of measures related to a particular clinical condition. For example, new measures groups for 2009 include coronary artery disease, coronary artery bypass surgery, HIV/AIDS, rheumatoid arthritis, care during surgery, and back pain.

In addition, CMS plans to begin allowing physicians to report on certain measures through electronic health records in 2009, pending successful testing this year.

While the CMS proposal does not include bonus payments for physicians as part of the program, the pay fix legislation recently passed in Congress does. For 2009, physicians participating in PQRI will be eligible for bonuses of up to 2% of total allowable Medicare charges for successful reporting of measures. The legislation authorized additional bonuses of 2% for electronic prescribing quality measures.

The fee schedule proposal also tackles the issue of potentially "misvalued" services and supplies. In the proposal, CMS has identified a list of high-cost procedures and has required that the American Medical Association's Relative Value System Update Committee (RUC) to assess the list. CMS also is proposing a new process to review new, higher-priced supply items on a more frequent basis. CMS plans to update high cost supplies every 2 years, focusing on those supplies that cost $150 or more.

The CMS proposal also would require physicians who perform diagnostic testing services to meet most of the quality and performance standards established for Independent Diagnostic Testing Facilities including requiring a supervising physician to prove proficiency in the performance and interpretation of each diagnostic procedure and maintaining an inventory of diagnostic testing equipment. However, CMS officials are considering whether to limit that requirement to certain testing services. For example, CMS could choose to limit the requirements only to those procedures that generally involve high-cost testing and equipment.

The proposed rule also gives physicians a glimpse of the CMS thinking on the possible expansion of the agency's hospital-acquired conditions policy. Beginning Oct. 1, CMS will begin withholding payment to hospitals for certain conditions and infections acquired after admission.

While the agency did not propose any changes in policy, it wrote in the proposed rule that the hospital-acquired condition payment policy could be expanded into other settings, including hospital outpatient departments, skilled nursing facilities, and physician practices.

Implementation would be different in each setting, according to the proposed rule, but the idea would be to require the provider that failed to prevent the condition from occurring in one setting to pay for the follow-up care in the second setting.

"This would help shield the Medicare program from inappropriately paying for the downstream effects of a preventable condition acquired in the first setting but treated in the second setting," CMS wrote.

The proposed rule was published in the Federal Register on July 7 and can be found at www.cms.hhs.gov/center/physician.asp. CMS expects to issue a final rule by November.