American College of Physicians: Internal Medicine — Doctors for Adults ®

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Policy briefs

From the October ACP-ASIM Observer, copyright 2002 by the American College of Physicians-American Society of Internal Medicine.

College: Medicare must reverse 'severe' reimbursement cuts

A new white paper from ACP-ASIM's Washington Office calls on Congress and the Bush administration to reverse reimbursement cuts to the Medicare program. The paper warns that recent cuts are restricting access to care and calls on legislators to reverse the trend by first restoring physician fees.

The paper, "Reimbursement problems undermine Medicare," says that short-term Medicare savings will ultimately produce a Medicare population that is less healthy and requires more costly care. The paper also points out that cuts to the program are threatening the safety net for the 39 million Americans who have no health care coverage.

Because physicians are experiencing the most "severe" cuts, the paper argues, their reimbursement should be improved first. While Medicare pay for physicians took a drastic 5.4% hit for the current year, the paper points out, it reflects the continuation of a decade-long trend.

Over the past 10 years, for example, physician practice costs have outstripped Medicare payments by 13%. By 2005, the paper notes, Medicare will pay physicians less than it did in 1992.

In its white paper, ACP-ASIM calls on the federal government to reinstate reimbursement to levels before the 1997 Balanced Budget Amendment, which slashed payment to many Medicare providers. While hospitals, teaching facilities and home health agencies were all hard hit by those cuts, the College argues that physicians are suffering the most severe cuts and should receive payment relief before anyone else.

In early September, the College also sent a letter to Sen. Tom Daschle (D-S.D.), urging him to "do everything possible" to support legislation passed by the House earlier this year that would halt future cuts to Medicare reimbursement.

The Sept. 9 letter said that the Medicare Modernization and Prescription Drug Act of 2002 (H.R. 4954), would replace expected cuts of 12% over the next three years with small increases. ACP-ASIM President Sara E. Walker, MACP, called on the Senate to increase physician pay by 3% next year.

Dr. Walker warned that if the bill was not passed by early November, Medicare will cut physician pay by another 4% in 2003. The move would discourage even more physicians from participating in the Medicare program, she noted, worsening access problems.

The white paper is available online. The College's letter to Sen. Daschle is online.

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College supports bill to reform liability insurance for physicians

In a Sept. 4 letter to the House Judiciary Committee, ACP-ASIM President Sara E. Walker, MACP, urged legislators to support legislation that would address the growing crisis over professional liability insurance for physicians.

In the letter, Dr. Walker asked legislators to vote in favor of the Help Efficient, Accessible, Low Cost, Timely Health Care (HEALTH) Act of 2002. She explained the sticker shock that many physicians have experienced because of rising insurance premiums, pointing out that specialists in internal medicine have seen their professional liability insurance rates increase nearly 45% in the past three years.

Dr. Walker warned that rising liability insurance rates may reduce access to care. She also noted that physicians are changing carriers, moving to states where premiums are more reasonable or retiring from practice altogether. In many areas, high premiums are leading to a shortage of physicians and are forcing emergency rooms and trauma centers to close.

The College supports the HEALTH Act because it would reform the tort system and place caps on noneconomic damages. That and other changes in the bill would reduce frivolous lawsuits and excessive malpractice awards, helping reduce liability insurance premiums.

Dr. Walker's Sept. 4 letter is available online.

In an Aug. 13 letter, the College joined more than 100 medical organizations in thanking President Bush for his call earlier in the summer to overhaul the nation's medical liability system.

In remarks made in North Carolina on July 25, the president said that escalating jury awards are driving up the cost of liability insurance and threatening the fiscal security of physicians. The president pointed to Nevada, where one trauma center was forced to close for 10 days because surgeons could not find or afford insurance.

The Aug. 13 letter noted that the organizations support proposals made by HHS in July. The plan includes a cap on noneconomic damages, a strategy the letter said has worked for patients and physicians in California.

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Medicare needs to improve pay for immunization administration

ACP-ASIM joined a coalition of health care organizations in calling on Medicare to streamline its codes and payment for influenza vaccinations.

While the CDC has worked with the public health community to boost immunization rates for influenza among the elderly, Medicare is using codes that pay roughly half of standard CPT codes. In an Aug. 27 letter to Thomas A. Scully, HHS administrator, the College and 15 other organizations called on the Medicare program to bring its payment for immunizations in line with that of other payers.

Instead of using CPT codes for vaccine administration that are used by other third-party payers, Medicare has established its own codes, G0008 and G0009. Because Medicare bases its relative value for these two codes on a code for therapeutic injection, not the CPT code for immunizations, Medicare underpays physicians for administering preventive influenza and pneumonia vaccines that it has deemed "medically necessary."

In the Aug. 27 letter, ACP-ASIM and the other organizations called on Medicare to use standard CPT codes for administering immunization. If Medicare continues to use its own codes, the letter stated, it should link the relative values for those codes to standard CPT codes.

Deaths from pneumonia and influenza together constitute the sixth-leading cause of death in the United States. Influenza hospitalizes 110,000 Americans and costs the country between $3 billion and $5 billion a year.

The letter is available online.

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Rising drug costs hurting Medicare pay for physicians

The College wants Medicare to stop including the rising costs of drugs when it calculates spending targets for physician services, saying that physician reimbursement is suffering because of huge increases.

Medicare uses a formula known as the sustainable growth rate (SGR) to determine future spending levels. To keep the Medicare program from going over budget, the government includes large increases in the costs of services in the SGR. Large spending increases typically result in reimbursement cuts for physicians and other Medicare providers to keep the budget balanced.

Between 1996 and 2000, Medicare spending on covered drugs rose by 22% a year, or 125% per beneficiary. In an Aug. 27 letter to Thomas A. Scully, CMS administrator, ACP-ASIM said those rising costs are a key factor in projected physician reimbursement cuts.

HHS officials have said they are concerned that removing drug expenses from the formula would remove incentives for physicians to exercise restraint when prescribing drugs to Medicare beneficiaries.

The College, however, has argued that much of the increase in drug spending can be traced to government policies encouraging the rapid development of new drugs, as well as government-backed efforts to test and treat Medicare beneficiaries for cancer and other diseases.

The letter is available online.

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Smallpox vaccine should target 'first-contact' health providers

ACP-ASIM supports recent recommendations on smallpox vaccinations that would limit the vaccine to designated teams of "first-contact" health professionals instead of broadening a vaccination program to target up to 500,000 physicians, nurses and health care professionals.

In an Aug. 9 letter to HHS Secretary Tommy G. Thompson, ACP-ASIM voiced support for the smallpox vaccination policy proposed by the Advisory Committee on Immunization Practices (ACIP). That committee advises the CDC.

In its June recommendations, the committee recommended not vaccinating the general population in current low-risk scenarios. It did, however, recommend vaccinating individuals such as investigators and health care personnel who might face exposure during an attack or other incident.

In its letter, the College said that as long as the risk of exposure to smallpox remains low, any vaccination program should be voluntary. ACP-ASIM also said that the committee needs to address the issue of liability for adverse reactions, identify who would administer the vaccine and how they would be paid, and conduct educational efforts for both physicians and patients.

For more on ACP-ASIM's position on smallpox vaccines, see the Aug. 9 letter online.

For more on vaccines, see the College's Adult Immunization Initiative.

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