Congress Rejects Big Cut In Medicare Payment

Mark Moran

Because of congressional action, payment for psychiatrists will drop on average by just 2 percent instead of 7 percent. Other specialties will still be experiencing greater cuts in payment even after the action by Congress.

An 11th-hour intervention by Congress averted a scheduled 5 percent across-the-board reduction in reimbursement for physicians and other health care professionals participating in the Medicare program in 2007. However, many physicians, including psychiatrists, will still see a decline in their 2007 reimbursement because of other government adjustments to the fee schedule.

On the last day of the session before adjourning for the Christmas recess, Congress approved HR 6111, the Tax Relief and Health Care Act of 2006, which includes a provision eliminating the 5 percent overall payment reduction that was to take effect January 1 as part of an annual update issued by the federal Centers for Medicare and Medicaid (CMS). That update stemmed from a change to the “conversion factor” that is used in the formula to determine physician fees and is adjusted from year to year to maintain budget neutrality.

The bill, which at press time was expected to be signed by President Bush, also includes a 1.5 percent “bonus payment” to physicians who voluntarily report certain quality data as part of a CMS pilot program. The 1.5 percent bonus is effective from July 1 to December 31, 2007.

Left unaffected by the Congressional action is a separate adjustment to so-called work and practice expense relative value units (RVUs). That adjustment, the result of a recent five-year review of RVUs, is expected to decrease psychiatrists’ payment under the Medicare program by 2 percent on average. On top of the 5 percent adjustment to the conversion factor, payment for psychiatrists had been expected to drop on average by 7 percent next year (Psychiatric News, December 15, 2006).

Now, because of the Congressional action, payment for psychiatrists will drop on average by just 2 percent. Many other specialties will be experiencing greater cuts in payment even after the action by Congress.

(The work and practice expense RVUs are components of the Resource-Based Relative Value Scale, the elaborate formula used to calculate physician payment under the Medicare program; another component is the malpractice insurance expense RVU. To derive a payment rate for each CPT code, the three components are added together and multiplied by the conversion factor.)

HR 6111 states that the measures to be used for quality reporting are those formulated for the CMS Physician Voluntary Reporting Program. Among them are measures for reporting use of antidepressant medication for a new episode of major depression.

APA and AMA welcomed the congressional action, while vowing to continue advocating for a reform of what AMA has persistently called a “flawed” Medicare physician payment formula.

Nicholas Meyers, director of APA’s Department of Government Relations, said, “APA joins the AMA and all of medicine in thanking the members of the 109th Congress for their success in blocking a damaging Medicare cut,” he said. “The action amounts to a significant payment shift in favor of psychiatrists and other physicians.”

Meyers added, however, that “this is not a permanent correction to the underlying flawed payment formula. We will continue our work with the AMA to fix the formula once and for all so our members don’t have to worry about the payment fight every year.”

In a statement released after passage of the bill, AMA Board Chair Cecil Wilson, M.D., said, “Congressional action to avert next year’s 5 percent Medicare physician payment cut will help avert a potential sharp decline in access for America’s seniors.”

With respect to quality reporting, Wilson noted that the AMA Physician Consortium for Performance Improvement, which includes representation from APA, has already developed 151 quality measures.

“We will work to ensure that consortium measures continue to form the foundation of a Medicare quality reporting program,” Wilson said. “We will work closely with the incoming Congress to address concerns with the current reporting framework.”
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