By Richard Rubin, CQ Staff

June 18, 2010 -- The Senate passed a six-month fully offset "doc fix" bill by voice vote on Friday after extracting it from a larger tax and benefits package that has been stalled for months.

The move solved one messy legislative problem, but left other big issues lingering.

"This is good news," said Senate Finance Chairman Max Baucus, D-Mont. "Let's savor something."

The $6.5 billion bill would prevent a 21 percent cut to doctors who receive reimbursements from Medicare and increase their pay by 2.2 percent. A previous short-term extension expired June 1, and the administration has prevented the cut from taking effect until now.

The Medicare bill must still pass the House, which is not scheduled to return until the evening of June 22. House Democratic leadership aides said lawmakers would study the bill and the offsets before deciding how to proceed.

The bill was partially offset by changes to changes to pension funding rules that would reduce required payments by companies, and some of that language may cause concern in the House. Another offset would prevent hospitals from submitting separate Medicare reimbursement claims for inpatient care and outpatient care provided within three days of a hospital admission.

The doc fix measure is exempt from the pay-as-you-go law, but many lawmakers, expressing concern over the federal deficit, had called for the provision to be offset.
The passage of the doc fix bill decoupled it from the broader bill. Senate Democrats came up four votes short Thursday evening in their attempt to invoke cloture on the $118 billion measure, which also would extend unemployment benefits, revive expired tax breaks and add a grab bag of spending on items such as summer jobs, affordable housing and agricultural disaster assistance.

The fate of that bill, particularly without the doctor language, remains up in the air.

Baucus said he hoped to build on the success of the doctors' bill as he tried to salvage the rest of the package. But it was still unclear whether the Senate would return to consideration of the bigger bill next week.

"We'll see what adjustments can be made by then," Baucus said.

The 21 percent pay cut for physicians who treat Medicare patients took effect Friday. The Centers for Medicare and Medicaid Services directed contractors Friday to begin submitting claims dating back to June 1, saying it could no longer delay the payment process in anticipation of Congressional action.

Should lawmakers in both Houses extend a payment fix, "we are prepared to act expeditiously to make the appropriate changes to Medicare claims processing systems," the agency said in a statement.

Doctors have been clamoring for a long-term change to the reimbursement formula, and American Medical Association president Cecil B. Wilson complained about a short-term solution.

"The Senate has been debating this issue for weeks and the latest proposal is a six-month delay of the cut," Wilson said in a statement. "Delaying the problem is not a solution. Continued short-term actions are creating severe instability that harms seniors as physicians make decisions to protect their practices from Medicare's volatility. Continuing down this path just slaps a Band-Aid on a problem that needs urgent surgery."

Edward Epstein and Emily Ethridge contributed to this story.

By Jane Norman, CQ HealthBeat Associate Editor

June 18, 2010 -- Past studies and surveys haven't found that the continuing turmoil over Medicare physician reimbursements affects patients' access to care, but some doctors say this topsy-turvy year has been a game-changer.

The Senate on Friday passed by voice vote a six-month postponement of a scheduled 21 percent cut in physicians' Medicare pay. Payments instead would be increased by 2.2 percent.

However, the House will not be in session until June 22 to take action, and Medicare announced it will begin processing claims dating back to June 1 that include the pay cut. And if the House accepts the Senate language, it would resolve the problem only temporarily. The Senate measure would expire Nov. 30, kicking action on the increasingly troublesome "doc fix" until after the November midterm elections.

The latest episode marked the third time this year that Congress didn't act before the payment cuts went into effect. Doctors say the legislative scrambling has brought an unprecedented level of uncertainty and frustration into their practices.

Susan Bailey, president of the Texas Medical Society and an allergist, said she saw a Medicare patient on Friday morning who told her it took a year to find a primary care doctor who was accepting new Medicare patients. "I hear that story all the time," Bailey said.

Officials at the society pointed to a May article in the Houston Chronicle that said 100 to 200 doctors a year in Texas are opting out of the program. Prior to 2007, just a handful of doctors would leave annually, the Chronicle said. More than 300 exited Medicare in the last three years including 50 in the first three months of 2010, according to data from the state's Medicare carrier.

"There's no question physicians are leaving Medicare at greater rates" in Texas, said Bailey.

Pam Udall, a spokeswoman for the society, said she spoke with a physician now owed $200,000 by Medicare after the 17-day hold on claims. "There's a lot of discouragement," she said. "Before, we had to fight this yearly. But it's monthly now."

The formula under which physicians are paid is called the sustainable growth rate, or SGR, which attempts to control spending under Medicare Part B physician services. It sets an overall target for spending, and so payment rates are supposed to be adjusted up or down or down ever year, though Congress regularly steps in to prevent cuts. Those legislative fixes, however, are costly—the six-month extension passed by the Senate would cost $6.5 billion.

So far, annual surveys by the Medicare Payment Advisory Commission have not detected major problems in seniors' access to care. Results from the 2009 survey found that most beneficiaries have reliable access to physician services and can easily schedule appointments and find new doctors when needed. Among the 6 percent of patients in the 2009 survey who said they were looking for a new doctor, 22 percent said they had problems finding one who accepted Medicare.

That corresponds to less than 2 percent of the entire Medicare population, but a March MedPAC report acknowledges those problems can be distressing and are often featured in news reports. "It is also important to note that such media accounts typically report similar problems for privately insured individuals," MedPAC said. Some particular markets may have problems of access more than others, the report also noted.

Those looking for a new specialist also reported more problems than those who needed a primary care provider.

The agency, which advises Congress on Medicare policy, is in the field right now conducting its annual survey and should have results available later this year.

In Search of Predictability
In Ohio, Jason Koma, a spokesman for the Ohio State Medical Association, said he doesn't have any hard data on whether physicians are fleeing Medicare in his state, where there are many elderly residents. But he said the level of unhappiness is high. "We have heard from many physicians that because of the continued inaction on this issue that they are no longer taking new Medicare patients or are planning to stop seeing new Medicare patients," said Koma.

Cecil B. Wilson, president of the American Medical Association ( AMA), in a statement blasted congressional inaction on a permanent fix for the reimbursements. "Congress is playing Russian roulette with seniors' health care," said Wilson. "Congress has finally taken its game of brinkmanship too far, as the steep 21 percent cut is now in effect and physicians will be forced to make difficult practice changes to keep their practice doors open."

While Congress almost certainly will avert the cut, it's the uncertainty that's the problem, physicians say.

The AMA recently conducted an online survey of more than 9,000 physicians who accept Medicare patients. It found that one in five are restricting the number of Medicare patients in their practices. Among that group, 85 percent said Medicare payment rates are too low and 78 percent said the ongoing threat of payment cuts makes Medicare an unreliable payer.

Looking at just primary care providers, a third in the AMA survey said they're restricting their number of Medicare payments.

Still, past surveys don't detect that trend. MedPAC in its report noted that the Consumer Assessment of Healthcare Providers and Systems for Medicare FFS, a large survey sponsored by Medicare, has since 2001 consistently found that the share of beneficiaries reporting major problems accessing physician care has remained below 6 percent.

MedPAC, however, has recommended that the survey ask specifically about primary care providers, including physicians, nurse practitioners and physician assistants.

Andrew LaMar, a spokesman for the California Medical Association, said he has no concrete evidence of physician flight among the association's 35,000 members. "I will say what's happened this spring has been tremendously frustrating," he said. The impasse has been particularly hard on doctors in rural areas with high percentages of Medicare patients. If they go out of business or can't accept new patients it's a hardship on beneficiaries who then must drive a distance for care, he said.

"It's not a good time to be undermining credibility and faith in the federal government to execute health care," he added. "I do think there's some dangerous long-term consequences to this."

In Texas, the Chronicle said it found a large share of physicians leaving Medicare are psychiatrists, and the American Psychiatric Association said the turmoil over the pay cut is making it tough for psychiatrists to treat seniors with illnesses such as dementia.

"The administrative hassles and uncertainty associated with the continuing problems with the SGR make it impossible for some physicians to manage their practices effectively and to continue seeing Medicare beneficiaries," said Nicholas Myers, director of government relations.

AARP also joined the chorus of worry. "Finding a physician is already a challenge for our members and older Americans," the group said in a statement. "By allowing these cuts to take effect Congress has only made this challenge more difficult for millions of seniors already in Medicare and those entering the program for the first time.

By John Reichard, CQ HealthBeat Editor

June 14, 2010 -- Aha! Republicans proclaim. Even the White House admits that health plans will face so many changes under the overhaul law that half or more of existing employer plans will lose their "grandfather" status as of 2013.

So much for President Obama's promise to the American people that you'll be able to keep the coverage you have, Republicans scoff.

So what! Democrats retort. If plans do lose their grandfather status, the changes involved will help people, not hurt them, by giving them new consumer protections.

If consumers are left scratching their heads, it's not unusual in a post-enactment debate where every new development has the parties fighting to frame public perceptions of the law.

The result may be confusion more often than clarity—but don't look for the exchanges between the parties to stop any time soon. Both are sure to keep cranking out messages about virtually every wonky development under the law, hoping that by election time this fall, they'll find the right words to fix public perceptions.

To Health and Human Services Secretary Kathleen Sebelius, the grandfather reg announced Monday is all about holding down cost shifts to consumers as health plans encounter rising costs. Deductibles, co-payments, and co-insurance—the percentage of charges the consumer pays—can only rise so much under the reg without a plan losing its grandfathered status.

And if plans cut benefits, saying they will no longer cover care for diabetes or HIV/AIDS, for example, they also will lose grandfather status.

What then? Plans will have to comply with mandates such as coverage of recommended preventive care with no cost-sharing and guaranteed access to pediatricians and obstetricians and gynecologists.

But how are plans supposed to keep afloat as their own costs rise? One thing they can do without losing grandfather status, at least to some degree, is raise premiums — and one thing the public clearly understands and doesn't like is rising premiums.

A PricewaterhouseCoopers survey released Monday said employers can expect health costs to rise 9 percent in 2011 after rising a predicted 9.5 percent this year. Premium increases next year could cause consumers to lose confidence in the law, never mind that increases would have been much greater had it never passed, according to the Congressional Budget Office.

Asked what impact those price hikes might have on public opinion of the law, Sebelius said in a news conference Monday on the reg that the survey did not attribute the expected increases to the law.

"I know that there are a lot of folks who will be disappointed that there isn't immediate cost relief, but I think [the survey] . . . argues the case that we could absolutely not afford to do nothing." She suggested that the law will help get a handle on those costs by driving changes toward a payment system that emphasizes quality and efficiency.

Meanwhile, Sen. Charles E. Grassley of Iowa, the top Republican on the Finance Committee, suggested Monday that the regs are just more evidence that the overhaul law isn't what it's cracked up to be.

"Today's new rules from the federal government on 'grandfathering,' which were crafted without any opportunity for public input, are just more proof that despite all of the promises made by the president and other supporters, you actually can't keep what you like under the new partisan health reform law," he said. "Change is coming for a lot of people, whether they want it or not."

And the early review from Neil Trautwein, vice president of the National Retail Federation, was not favorable. Trautwein said that based on his preliminary look at the regulation that its limits on how much employers could increase costs to employees "could be too strict for the value employers will get by pursuing grandfather status."

Employers might opt instead to simply adopt wider consumer protections in order to retain their ability to raise deductibles, co-payments and other cost-sharing with employees. But the added consumer protections they would have to offer would hike employers' own costs, and in combination with other factors, perhaps make employers more likely to drop coverage altogether in 2014 when coverage-related mandates begin and pay the penalties involved.

If employers were looking at the grandfather reg as a harbinger of "how the Obama administration wants to craft regulations this was pretty strict and pretty troubling," Trautwein said.

But patient advocacy groups see the regulation differently. The American Cancer Society Cancer Action Network (ACS CAN), the advocacy affiliate of the group, said "this is a strong rule that encourages plans to strengthen benefits."

Susan Eckerly, senior vice president of the National Federation of Independent Business, also criticized the reg.

"A lot was said today about choice and flexibility and 'keeping what you like' under the new health care law. However, today's latest rules on grandfathered plans mean small businesses will be left with even less choice and flexibility. Instead, they will be faced with the difficult choice of paying more to maintain grandfathered coverage, shopping for a new (and more expensive) plan or possibly dropping it entirely," Eckerly said.

By John Reichard, CQ HealthBeat Editor

June 15, 2010 -- It didn't weigh in directly on the historic health care law, but the Medicare Payment Advisory Commission (MedPAC) had no small impact on the legislation, making recommendations that Democrats seized on to cut Medicare spending and help pay for coverage of the uninsured. Now the commission's impact could be felt once again—if Congress embraces its new recommendations to change the training of doctors.

MedPAC's advice on "GME in Medicare" may sound dry, but it's about producing a new breed of physician. Medicare's "graduate medical education" payments play a large role in financing the training of American doctors, and MedPAC says the program can help to transform the health care system.

"The current graduate medical education system produces superb physicians," but the commission is concerned about its current structure, MedPAC Executive Director Mark Miller said in briefing reporters Tuesday on this year's version of the panel's "June report." The document details the subjects the commission will focus on in coming months, along with making various recommendations.

Commissioners question whether current methods of training are able to produce a mix of medical professionals that will lead change in health care delivery from a focus on fee-for-service medicine to focusing on quality of care, better coordinated care and restraining costs.

"We found that curriculums we looked at in residency programs didn't focus on things like working in multidisciplinary teams, didn't use quality metrics . . . didn't focus on the use of IT — those types of skill sets," Miller explained.

The training systems "tended to be highly focused on inpatient care and less on out-of-hospital types of care."

Medicare spends $9 billion annually on financing graduate medical education, Miller said. "Our recommendation is to take $3.5 billion of that . . . and make it performance-based funding," he said. The money would go to programs that do emphasize team-based care, compliance with quality-based performance measures, better coordinated care and treatment outside of hospitals in primary care clinics and in nursing homes, for example.

"This is decidedly a shift in how this money is currently allocated."

The commission wants independent research on the numbers of and different types of health care professionals needed in a system that is better organized and more efficient. Current workforce projections are based on the needs of a less optimal system, Miller suggested.

The commission also wants research to better pinpoint how medical education should foster diversity in terms of seeking students from different races, income levels and geographic areas. And MedPAC wants more specifics on approaches that work best to bring health care professionals to medically underserved communities.

MedPAC also calls for a greater understanding of how individual institutions spend their GME dollars. The aim is to determine how much funding is needed to support high quality education. To reach that goal it urges HHS to "annually publish a report that shows Medicare medical education payments received by each hospitals and each hospital's associated costs."

Another theme of the report is how to make Medicare a more innovative purchaser of health care. MedPAC wants to explore whether to urge adoption of "reference pricing," for example, in which a new item or service is paid at the same payment rate as an existing item that has comparable clinical benefit. Thus Medicare wouldn't pay any higher rates for a more expensive product that had the same clinical benefit as a less costly product. "We're going to continue to explore that idea," Miller said.

Miller also was asked about how the commission would work with the Independent Payment Advisory Board (IPAB) and whether the powers of the latter would make it more likely that MedPAC recommendations are actually put into practice.

"I think this generates more work for us," Miller responded. MedPAC is supposed to evaluate IPAB's ideas for streamlining Medicare, he noted.

"Whether it makes our stuff happen or not . . . is harder for me to say," Miller said. But "we're going to try to establish a strong working relationship with them," he added.

By Jane Norman, CQ HealthBeat Associate Editor

June 16, 2010 -- Health and Human Services (HHS) officials announced Wednesday they'll devote $250 million to training for primary care providers needed to treat Americans newly insured under the health care law and aging baby boomers.

HHS Secretary Kathleen Sebelius and California Democratic Rep. Lois Capps said on a conference call with reporters that the money will go toward training additional primary care physicians, physician assistants, nurses and nurse practitioners. The nation is facing a shortage of primary care providers, Sebelius said.

"For too long our health care system hasn't valued primary care providers enough," she said. Not long ago 50 percent of medical students chose primary care, but that number has fallen dramatically, she noted.

While the numbers have been rising recently it hasn't been enough to meet the needs of the population, she said. A recent study by George Washington University researchers found that medical schools vary dramatically in their percentages of graduates who go into primary care, and some of the nation's most prestigious medical schools graduate relatively few primary care doctors.

Sebelius said President Obama decided to use half of the $500 million in the prevention and public health fund that's part of the new health care law to pay for the expanded numbers of primary care providers. Together with funds allocated as part of the 2009 economic stimulus bill, Sebelius said it's expected that the development of 16,000 new health care providers will be supported by 2015.

Capps said the prevention and public health money wasn't something that was hotly debated during congressional consideration of the law but will be critical for improving American's health, and will help answer frequently asked questions about how the law will deal with doctor shortages.

Of the $250 million, $168 million will be used for opening up slots for training 500 new primary care doctors; $32 million for training physician assistants; $30 million to help 600 nursing students go from part-time to full-time school attendance; $15 million for operating 10 nurse-managed health clinics that help train nurse practitioners; and $5 million for states to plan how to expand their primary care workforces during the next 10 years.

Officials also said the IRS is publicizing another provision in the new law that expands a tax break for providers who practice in underserved areas.

By John Reichard, CQ HealthBeat Editor

June 18, 2010 -- During a slow-moving political storm marked by what Harvard pollster Robert Blendon calls "Level Four" anger, the last thing Democratic candidates want to face in September is 11 million angry seniors.

But when seniors in Medicare Advantage—the popular program of private health care plans in Medicare—open their mail this fall and find out how their coverage will change next year, they won't be happy.

The program has been a big draw because it offers extra benefits such as dental and vision care. It's also a much cheaper way than supplemental "Medigap" plans of getting coverage for the out-of-pocket charges not picked up by traditional Medicare.

But chances are seniors soon will be staring at higher premiums, and slimmer benefits, for Medicare Advantage. They'll no doubt be told the new health care law is to blame.

The reason for this is that as medical costs rise, the overhaul will at first flatten, then cut, federal payments to Medicare Advantage plans as part of an effort to finance coverage of the uninsured and allocate benefit dollars more equitably throughout the program.

The timing for Democrats couldn't be worse—the cutting comes just as GOP candidates fill the airwaves with the message that the overhaul threatens health care for the elderly.

Changes wrought by the overhaul law in the Medicare Advantage program will bite even harder as the presidential campaign season heats up a little more than a year from now. Industry analysts predict plans will begin to announce in the fall of 2011 that they won't stick with the program in 2012—forcing thousands, and maybe eventually millions, of seniors to find new plans or return to traditional Medicare, with its higher out-of-pocket charges.

The cuts alone won't shift control of either chamber of Congress. But as part of the mix of cuts that will slice $400 billion from Medicare over the next decade, they have Democrats worried. Blendon sees so much anger at incumbents that if the elections were held within two weeks, he says one of the two houses of Congress would flip.

Worried Democrats
From the Obama administration to Capitol Hill, Democrats worry how Medicare Advantage and other cuts will affect the votes of seniors, a key bloc in midterms since they are more likely to turn out.

Hill Democrats and Health and Human Services Secretary Kathleen Sebelius wrote letters in early June putting insurers on notice that their plan's bids for 2011 would be carefully scrutinized for premium hikes and benefit cuts. They said seniors should not suffer just because the law ends "gross overpayments" to plans.

The bigger headache for Democrats is the threat of plan withdrawals. America's Health Insurance Plans, which represents insurers in the Medicare Advantage program, hints that withdrawals will easily exceed those that followed enactment of the 1997 balanced budget law, which tightened reimbursement levels. From 1999 to 2003, nearly 2.4 million people were in plans that withdrew from Medicare, according to industry estimates.

After the 2003 Medicare drug law provided more generous reimbursements, Medicare Advantage enrollment grew steadily from 4.6 million that year to 11 million now. But with close to $200 billion in direct and indirect cuts now slated to come out of the program, enrollment could fall to as low as 7.4 million several years from now, said Medicare Actuary Richard Foster.

Tom Price, R-Ga., a surgeon who holds the old House seat of former Speaker Newt Gingrich (1979-99), said Democrats will pay in the fall for undermining health care for seniors.

The withdrawals, he said, belie President Obama's assertion that seniors will be able to keep their current health plan. If the administration "can intimidate or punish individuals in any way, they will," Price said, referring to a flap last year in which HHS objected to a mailing by the insurer Humana to its Medicare Advantage enrollees warning about the impact of the overhaul. "But that won't keep the message from getting to the American people."

But if Democrats are behind those deep cuts, they also can point to independent data saying they are merely trying to correct years of payments to private plans that exceeded those to providers in traditional Medicare—no small irony since those plans were supposed to save Medicare money, not add to its spending.

And John Gorman, an industry consultant, sees plans thinning their bottom lines next year rather than really socking it to seniors. Why? As a way of holding market share while they get a better read on whether competitors will bail from the program in 2012.

Gorman also thinks the enrollment drop won't be as dramatic as Foster predicts. Even if the extra benefits provided by the plans largely disappear, they are still a good deal since they keep enrollees from having to buy a supplemental "Medigap" plan to cover a number of charges traditional Medicare doesn't cover.

In the end, insurers will take the hit more than Democrats as plans notify seniors about rising premiums or withdrawals from the market, predicts a former Medicare Advantage plan executive.

"They're going to kill the messenger," the executive says. "The messenger is going to be the insurance industry."