Health Reform Update
September 30, 2009
Geographic equity for Iowa's physicians took a big step forward on Tuesday with an amendment sponsored by Senator Charles Grassley that passed the Senate Finance Committee 23-0. The amendment to the bill would reduce Medicare's geographic adjustments by ΒΌ in January 2010 and then by one half in 2011. During the next two years, the Centers for Medicare & Medicaid Services (CMS) would be required to analyze and ensure that any geographic adjustments are accurate, or the 2011 changes would continue.
This amendment would require CMS by 2012 to change the way they measure potential geographic practice cost differences. The Iowa Medical Society has for many years insisted that the current proxies are inaccurate and that CMS has been mistakenly using the wrong weighting for rent differences. CMS has used office expenses (including many other costs that do not vary) instead of only rent/occupancy costs to adjust the payments, and was consequently over-adjusting and shortchanging Iowa and many other regions. We showed that CMS has for 17 years never used data for the correct weighting of the rent category for these geographic penalties!
This reanalysis by CMS for determining accurate geographic differences will be based on real data (not proxies) from surveys like the AMA's latest practice expense (PPI) survey. The PPI survey was used by CMS to make changes in relative value units (RVUs) and Medicare fees for 2010 for different specialties. The Iowa Medical Society last year asked the AMA to also use that same survey to do a geographic analysis of practice cost differences. Though the results have been out for RVU purposes since March, we are still awaiting the result of the AMA's geographic analysis.
The impact of this Senate Finance Committee amendment would be to bring a 1.5 to 2% increase in 2010 and 3 to 4% increase in 2011 in Medicare fees to Iowa physicians. Early estimates calculate this would amount to over $10 million in 2010 and over $21 million in 2011 in additional Part B payments in Iowa.
Sustainable Growth Rate (SGR) Formula
As you know, Congress will also need to correct the SGR formula, which threatens a nationwide Medicare cut of over 21% in 2010. Though the House bill has a permanent fix for the SGR, the Senate Finance Committee bill does not (because of Pay-Go rules). A vote later on the Senate floor will be necessary to fix the SGR.
The Public Option
Some Democratic senators (and all the Republicans) on the Finance committee Tuesday voted against offering a public option in the Finance committee bill. I believe the focus on the severe geographic underpayments by Medicare in many rural states has led to more concern about the public option. Many states have higher payments from Medicare than private insurance payments, and there is more support for the public option in those states. There will still be a vote on the Senate floor regarding the public option, but as Senator Baucus (who voted against the public option) said, there are not 60 votes in the Senate for a public option.
Paying for Value
With regard to the major and bipartisan concern about the unsustainable increases in the cost of health care, the Iowa Medical Society has been advocating for delivery system and payment reform that would give more incentives to pay for value (quality/cost). No state has a higher combination of high quality and cost-effective care than Iowa. There are bills in the House sponsored by Iowa Congressman Bruce Braley and bills in the Senate by Senator Grassley that would begin to pay physicians for giving better care that actually can reduce costs. Some examples of this would be to reward physicians for better preventive care and keeping patients with chronic diseases healthier and out of the hospital. Promoting higher quality and more cost-effective (not more expensive) care will reduce health care costs.
Your Iowa Medical Society will continue to advocate for fair and accurate payment as well as paying for the high-value care that our physicians offer.
Michael Kitchell, MD
IMS President