Congress, AMA Mull Better Ways for Medicare to Pay Doctors

Congress, AMA Mull Better Ways for Medicare to Pay Doctors.

The way Medicare pays doctors is a mess. Every year or so, an automatic pay cut looms, and Congress scrambles to come up with a last-minute, temporary patch to block the cuts. The most recent scramble ended in July, when Congress overrode a presidential veto to pass a patch that runs through the end of next year.

Everybody knows this is a silly way to run things, but nobody’s managed to come up with a better alternative. At hearing in Congress yesterday, a few key players tried to move in that direction.

Several key figures are trying to make some changes.

Medicare Improvements for Patients and Providers

The Medicare Improvements for Patients and Providers Act of 2008 enacted July 15, 2008 created changes to the Medicare program. These changes have been communicated to affected parties (such as - physicians, therapy services, DMEs).

As a result of the new law, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate reduction of -10.6% is retrospectively replaced with the fee schedule rates in effect from Jan - June 2008, which reflected a 0.5 percent update from 2007 rates. Additionally, MPFS payment rates are being revised to increase the fee schedule amounts for certain mental health services. More information on physician pay issues is available at Centers for Medicare & Medicaid Services (CMS).

Under the Medicare statute, Medicare pays the lower of submitted charges or the Medicare fee schedule amount. Claims with dates of service July 1 and later billed with a submitted charge at least at the level of the January 1- June 30, 2008, fee schedule amount will be automatically reprocessed. Any lesser amount will require providers to contact their local contractor for direction on obtaining adjustments. Non-participating physicians who submitted unassigned claims at the reduced nonparticipation amount also will need to request an adjustment.

CMS will be implementing other provision of the legislation in the coming months and will announce additional information as it becomes available.

CMS Proposes Rules for New Rates

CMS just released a proposed rule to update its approach for paying hospital outpatient and ambulatory surgery center services.

The new rates are based on a 50-50 blend of the 2007 payment rate and the 2009 payment, which represents 65 percent of the hospital outpatient rate.

According to CMS, the proposed rule will build on efforts across Medicare to transform the program into a prudent purchaser of healthcare services, paying based on quality of care, not just quantity of services.

The new rule would include a 3 percent annual inflation update to Medicare payment rates for most services that would be paid under the outpatient PPS. That increase would apply to hospitals that report data on seven outpatient quality measures. Facilities not submitting the data would receive only a 1 percent update.

More than 4,000 hospitals and community mental health centers are expected to participate in the program in 2009.