August 11, 2006

2006

August 11, 2006

HEADLINE

Medicare to Cut Payments to Physician by 5.1 percent in 2007

The Center for Medicare and Medicaid Services (CMS) recently released the proposed Medicare Physician Payment rule for 2007 which included a 5.1 percent cut in Medicare payments to physicians and other Medicare Part B providers. The 5.1 percent cut was slightly more severe than the 4.8 percent cut that had earlier been projected.

As you may recall, cuts in Medicare payments to physician result in the flawed formula – called the Sustainable Growth Rate – that penalizes physicians for providing more care, inappropriately includes physician administered drugs in the physician expenditure pool and undervalues the impact law and regulation on increases in physician services.

The larger than expected cut in Medicare physician reimbursement will put additional pressure on Congress to prevent the cut. In the recent past, Congress has intervened to stop the cuts in Medicare physician reimbursement. Without Congressional intervention, it is estimated that the SGR formula will result in a cut of over 37 percent over a period of 9 years.

The proposed rule also implemented a number of other payment provisions including, a 25 percent reduction in the technical component reimbursement for multiple imaging procedures on contiguous body parts, extending the hospital outpatient payment caps for imaging services to similar imaging services in the physician offices, and the establishment of supplier standards applicable to independent diagnostic testing facilities.

PHYSICIAN PRACTICE

HHS Announces Intent to Issue Health Information Standards

This week, Department of Health and Human Services Secretary Mike Leavitt announced that the Bush Administration will soon issue an executive order requiring hospitals, physicians and other providers who participate in federal health programs to adopt standards for information technology, establish uniform methods for measuring and reporting health outcomes, and create standards of care for selected health conditions.

Secretary Leavitt indicated the standards will be pretty basic in nature but will establish a baseline for a more sophisticated data reporting and analysis system.

Senate Legislation Introduced to Stop Oxygen Equipment Transfer to Patients

In August, Senator Roberts (R-KS) introduced legislation (S. 3814) that would repeal the provision of the Deficit Reduction Act that caps Medicare rental payments for home oxygen equipment and transfers the title of the oxygen equipment to Medicare beneficiaries after 36 months. The legislation, titled the Home Oxygen Patient Protection Act, is the same as the House version introduced by Rep. Schwarz (R-MI).

The Deficit Reduction Act, which was enacted last year, capped Medicare payment for home oxygen equipment after 36 months and also mandated that Medicare beneficiaries take title of the home oxygen equipment after 36 months. As was reported in the previous edition of the Washington Letter, CMS recently published a proposed rule implementing the oxygen provision of the Deficit Reduction Act. The proposed CMS rule caps rental payments at 36 months, transfers title of the oxygen equipment, including tanks, masks and tubing, to the Medicare beneficiary after 36 months. CMS has proposed to change its reimbursement policy from a modality-specific payment system to a 6-tier system based on the equipment category.

Points of Contact

Gary Ewart	Senior Director, Government Relations
Nuala Moore	Senior Legislative Representative
Joe Kirby	DC Office Administrator