March 29, 2010
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The 21.2% SGR Medicare Payment Cut -- Back on the Table, For Now On Friday afternoon, March 26th, the Senate adjourned for the “Spring District Work Recess” without adopting House-passed legislation that would have extended current Medicare physician payment rates through April 30, 2009. A vote on extending those rates is scheduled for the afternoon of April 12th, the day that the Senate returns. Readers should make sure to contact their Senators once again to communicate the urgency of repealing the sustainable growth rate (SGR) formula – not just for deferring the SGR-driven decrease. CMS will once again instruct the Part B contractors to hold claims for the first two weeks of the month so that no retroactive adjustments will be necessary. CMS believes Congress is working to avert the negative update that will take effect April 1. consequently, CMS has instructed its contractors to hold claims containing services paid under the MPFS (including anesthesia services) for the first 10 business days of April. This hold will only affect claims with dates of service April 1, 2010, and forward. In addition, the hold should have minimum impact on provider cash flow because, under the current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt. |
What does the health care reform package, which passed the House of Representatives on Sunday, March 21st by a vote of 219-212, change for practicing anesthesiologists?
- Expand coverage: With 32 million uninsured Americans to be covered by 2019, there will be more elective surgeries and fewer charges to be written off. Once the legislation – the Patient Protection and Affordable Care Act of 2009 (PPACA, H.R. 3590) - is fully implemented, 95 percent of the population will have health insurance.
- Young adults are more likely to have coverage, since their insured parents can now keep them on the policy until age 26. Anesthesiologists who are themselves parents of young adults will have better options for helping to insure them. This provision of the legislation takes effect immediately.
- Health insurance will be more affordable for families and small businesses because of tax credits and subsidies.
- Insurance market reforms : Within six months, health plans will no longer be able to set lifetime or unreasonable limits on the dollar value of benefits. Beginning in 2014, health plans will be prohibited from (a) imposing any pre-existing condition exclusions or engaging in medical underwriting and (b) charging higher premiums or denying coverage based on health status. This too should theoretically reduce some of the collection difficulties experienced by health care providers. Anesthesiologists are not typically the doctors with whom patients have their strongest or most enduring relationships and thus balancing billing can be problematic. Fairer, continuing, no-surprises coverage for patients should benefit anesthesia groups that might not have been paid when the health plan denied or canceled coverage in the past.
- Health insurance exchanges: Effective January 1, 2014, the states must establish “American Health Benefit Exchanges,” in which health plans wishing to tap into the increased pool of potential customers will offer qualified health benefit plans. The “public option” that was part of the legislation adopted by the House in 2009 is gone. It will be very important for our specialty to keep an eye on provisions regarding access to and payment for anesthesia services as the federal criteria for qualified plans develop.
- Medicaid will add 16 million low-income enrollees who will presumably seek more non-emergency services. Providing care for a large number of patients whose health plan pays for anesthesia services using a $9.30 (NJ) or $14.50 (FL) conversion factor could wreak havoc on practice finances.
- PQRI: In 5 years physicians will be required to report quality measures under Medicare’s Physician Quality Reporting Initiative, or see a reduction in their payments. Like ASA and others, we have long expected that the carrot of the annual PQRI bonus would at some time turn into the stick of lowered payments for noncompliance, and now we know when that will happen.
- PQRI bonuses will decrease from current incentives of 2% of overall Medicare charges today and in 2011 to 0.5% of charges in 2012, 2013 and 2014. Providers who don’t participate in PQRI will see payments drop by 1.5% in 2015 and 2% in 2016.
- Increase payroll taxes on unearned income: “High-income earners,” i.e., single taxpayers with salaries of $200,000 or more and couples with combined salaries of at least $250,000, will pay a Medicare surtax of 0.9% beginning in 2013. The “fixes” bill, the “Health Care and Education Reconciliation Act of 2010.” (H.R. 4872), which both the Senate and the House passed on Thursday March 25th will apply an additional 3.8 percent tax on investment income that exceeds the threshold.
- The PPACA also limits contributions to Flexible Spending Accounts and increases the threshold for deducting medical expenses from 7.5 percent to 10 percent of adjusted gross income.
- Tax high-cost (“Cadillac”) health insurance benefits: The fixes bill also lessened the impact of the 40% excise tax on Cadillac health insurance benefits by delaying implementation until 2018.
- Fraud and abuse enforcement: The PPACA contains a package of changes intended to reduce waste, fraud and abuse. Of particular interest to anesthesiologists are the following:
- Fines for fraudulent activity will increase to as much as $50,000 for each violation. All payments to the practice may be suspended pending a fraud investigation.
- The Department of Health and Human Services will establish a new national fraud and abuse data collection program, which will submit information to the National Practitioner Data Bank.
- The PPACA also requires HHS to establish a self-disclosure protocol for Stark violations.
- Physician-owned hospitals that do not have provider agreements in place before December, 2010 will be ineligible to participate in Medicare.
- Manufacturers of drugs, biologics, equipment and supplies will be required to disclose gifts to physicians.
What does the legislation not do?
- Fix the SGR problem: The PPACA does not address the untenable formula driving bigger and bigger Medicare physician payment cuts. An amendment introduced by Senator Judd Gregg (R-NH) but that was not adopted would have frozen payment rates at current levels until 2013. It would not have done away with the Sustainable Growth Rate formula, however, and the annual cycle of threatened reductions and last-minute temporary rescues by Congress will continue.
- Cut Medicare rates: Contrary to the belief of many who oppose health care reform, payment levels and coverage under traditional Medicare fee-for-service, the form of coverage enjoyed by 80% of Medicare beneficiaries, is unchanged by the passage of the legislation. Benefits stay the same, except for some of the drug, vision etc. benefits offered by the Medicare Advantage plans to which 24% of eligible patients belong. When the Medicare Advantage program was set up in 2003 budget legislation, Congress gave private health insurers a 15-percent incentive to launch plans. That bonus will be eliminated. This means that some beneficiaries who like their Medicare Advantage plans will not be able to keep them. It also means that the 76 percent with traditional Medicare will no longer be subsidizing the Medicare Advantage costs of the 24 percent.
Why do ASA and other medical specialty societies oppose the legislation?
ASA and other specialties sent a joint letter to Speaker of the House Nancy Pelosi on March 19 stating their disappointment and opposition to the Senate bill. This was based on two factors: (1) the bill’s failure to correct the malignant SGR formula and (2) the creation of “the unelected, unaccountable Independent Payment Advisory Board (IPAB). The IPAB must make recommendations every January 15th to the President and Congress for ways to reduce Medicare costs when spending exceeds the Consumer Price Index (through 2017) or the Gross Domestic Product (after 2017). There will be restrictions on Congress’ ability to change the recommendations, and if Congress fails to act, CMS will implement the IPAB’s recommendations.
ASA also rejects the bill’s “anti-discrimination” provisions that would require health plans to credential and pay providers based on state scope of practice laws, not on health plans’ own quality standards.
The AMA announced its qualified support for S.3590 on March 19, saying:
By extending coverage to the vast majority of the uninsured, improving competition and choice in the insurance marketplace, promoting prevention and wellness, reducing administrative burdens, and promoting clinical comparative effectiveness research, the AMA believes that H.R. 3590 does, in fact, improve the ability of patients and their physicians to achieve better health outcomes.
Supporters of the PPACA cite Congressional Budget Office estimates that the legislation will cut the federal budget deficit by $138 billion over the next ten years and by a further $1.2 trillion in the following ten years. Spending is expected to increase by $938 billion over the next 10 years – less than if the health care reform package had not become law.
Where do things stand procedurally?
In the end, the Reconciliation bill passed the Senate 56 to 43, and the House approved it again, this time on a 220 to 207 vote. It now awaits President Obama’s signature.
The combined PPACA, Reconciliation bill and Manager’s Amendment run several thousand pages in length. We have tried to summarize the most significant provisions that will affect anesthesia practice above; undoubtedly there will be questions from you, our readers, and we will probably uncover issues that are just as important for us all to understand. Please check next Monday’s Alert (April 5) for any updates.
With best wishes
Tony Mira
President and CEO
