Medicare Compliance & Reimbursement

...but P4P is part of the package.

The Centers for Medicare and Medicaid Services issued a grim reminder of what will happen if Congress doesn't rescue physicians soon.

CMS confirmed that physicians face an unthinkable 4.3 percent cut in 2006, and similar cuts from 2007 to 2012. The sustainable growth rate formula, which updates physician payments every year based on the volume of physician services and the growth of the economy as a whole, mandated the cuts.

Help may be on the way. Rep. Nancy Johnson (R-CT) introduced the long-awaited Medicare Value-Based Purchasing for Physician's Services Act of 2005 on July 28. Like similar bills in the House and Senate, the Johnson bill would avert physician pay cuts. But it also would impose a version of pay-for-performance on physicians.

The Johnson bill would give physicians a 1.5 pay hike in 2006 and then base payments starting in 2007 on the Medicare Economic Index, which measures costs of services. In 2007 and 2008, physicians would have to report quality measures, or their pay update would be reduced by 1 percent. And then starting in 2009, physicians would have to meet quality and efficiency targets (called "Q-measures" and "E-measures") or they would receive payments based on the MEI minus 1 percent.

Physicians would be directly involved in creating the quality measures, which should be evidence-based and related to clinical care. They would be adjusted, where possible, to the severity of the patients' illness. The Senate P4P bill, introduced by Sens. Chuck Grassley (R-IA) and Max Baucus (D-MT), would call on the Department of Health and Human Services to impose quality measures, and wouldn't fix the physician payment formula.

Washington insiders still fear that a fix to the SGR may appear too expensive in tight budgetary times, unless CMS removes Part B drugs retroactively from the SGR formula, something CMS has been reluctant to do. A group of 89 Senators, led by Grassley and Baucus, wrote to Joshua Bolten, director of the Office of Management and Budget, to urge the Bush administration to make this change administratively.

"Administrative changes to the physician payment formula will allow Congress to concentrate on a long-term solution that will stabilize physician payments in the future," the Grassley-Baucus letter insists. The practice of making short-term fixes to physician payments has only led to larger cuts in following years, the Senators note.  

"We urge you to use the authority of your office to approve this administrative action," they tell Bolten.