Medicare conference goes to last minute

Practice expense delay among key issues debated

High-level negotiations between Congress and the White House over the final shape of the proposed Medicare reform bill were still taking place as this issue of Physician’s Payment Update went to press. Although next month’s issue of PPU will contain a detailed analysis of the entire bill, we have enlisted the help of the Washington, DC, office of the Medical Group Management Association (MGMA) in compiling a short list of the top physician reimbursement issues that have been decided to date. They are as follows:

Practice expense. The House and Senate approved changes to delay implementation of the resource-based system for calculating practice expense relative value units for each physician service. (See our cover story in the August PPU for more details on HCFA’s practice expense proposal.) Under the compromise, official implementation of the new practice expense rule would be delayed one year until Jan. 1, 1999 After this, the revised fee schedules would be phased in over the next four years, starting with a 10% distribution of the newly adjusted work component fee schedule in 1999.

Although both the House Ways and Means Committee and the House Commerce Committee recommended this delay, the Commerce Commit tee included language directing HCFA to re-examine the methodology it used to create its proposed practice expense revamp. Specifically, the Committee asked HCFA to provide assurances that cost-accounting principles were used when creating the proposal. Critics of the proposal have questioned its methodology (see story in PPU August, p. 118).

Data collection methods re-examined

In addition, the Senate bill requires both the Secretary of Health and Human Services in consultation with physician groups and accounting experts, and the General Accounting Office, to re-examine the original data-collection methodology and determine whether new data collection is necessary. MGMA lobbyist Pat Smith says his organization will continue to urge the Conference Committee to accept the House language as part of the final bill, as it contains MGMA policy requiring a delay.

The anticipated outcome likely will lead to a one-year delay in the revamped practice expense proposal’s implementation, Washington insiders tell PPU. These insiders tell us they also expect Congress to accept the proposed 10% immediate down payment of new practice expense rates starting in 1998, as demanded by primary care physicians. However, look out for legislative language that could trigger further study, which could wind up delaying final implementation.

Fraud and abuse. The House and Senate rejected the Clinton administration’s attempts to repeal the provider guidance and protection provisions in last year’s Health Insurance Portability and Accountability Act. MGMA lobbied to defeat administration efforts to repeal the law’s provisions, which require HCFA to issue self-referral advisory opinions and anti-kickback safe harbors for managed care. In addition, the administration did not succeed in lowering the government’s burden of proof in criminal anti-kickback prosecutions. Unfortunately, the Senate approved a provision to create a new civil monetary penalty for kickback violations.

Graduate medical education. The House and Senate approved a provision requiring HCFA to conduct a demonstration project to direct medical education payments to consortia rather than individual teaching hospitals for up to five years. The House version includes group practices within the definition of consortia. However, the Senate language narrowly defines consortia to only include teaching programs within teaching hospitals. In another section of the bill, the Secretary of Health and Human Services is permitted to issue direct graduate medical education payments to non-hospital providers that Congress has defined as "federally qualified health centers, rural health clinics and other providers the Secretary deems appropriate."

Residency slots redistributed

The legislation gives teaching hospitals new incentives if they commit to substantial long-term reductions in the size of their specialty residency programs. Presumably, this market approach to the redistribution of residency slots from specialty care to primary care would not involve government intervention in deciding the distribution of residency slots.

The House and Senate bills include reductions in the indirect medical expenses (IME) adjustment from the current 7.7% to 5.5% over the next few years. This change will have an indirect impact on academic practice plans, and as such, MGMA lobbyists will continue to work with the Conference committee to accept the Senate language that would phase in the reduction more slowly than the House provision.

Average Adjusted Per Capita Costs (AAPC). The House and Senate bills include the president’s proposal to gradually remove DME/ IME and DSH payments from the AAPC calculation. Under this proposal, these payments will now go directly to teaching hospitals and the non-hospital facilities listed above — who want more direct control over this money — and not to HMOs.

The House Ways and Means Committee and Senate packages include language to adjust the AAPC geographic calculation by establishing a 50/50 local/national blend with a five-year phase-in. The House Commerce Committee approved a 70/30 geographic blend. The House language includes a $350 minimum AAPCC floor in its package, which would redistribute some AAPCC funds from urban to rural centers. The Senate’s floor is set at $397.