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Commission Broods over Payments for Primary Care

By John Reichard, CQ HealthBeat Editor

JANUARY 8, 2008 -- Medicare Payment Advisory Commission Chairman Glenn Hackbarth wasn't having it. A change in the wording of a proposed recommendation to Congress that, if followed, would seemingly drive up Medicare premiums paid by seniors for doctor care–to say nothing of the already big price tag for erasing a scheduled 21 percent in Medicare payments to physicians next year.

Hackbarth let it be known Thursday–the first day of the panel's two-day meeting dealing primarily with 2010 payment updates — that though he might lose, he would vote against anything higher than a 1.1 percent fiscal 2010 increase for doctors.

In the end, the panel voted Thursday to go along with Hackbarth on the 1.1 percent hike, along with payment updates averaging 2.7 percent for hospitals, an 0.6 percent increase for ambulatory surgery centers, and other payment updates. But the commission did not reach closure on the issue underlying the proposed wording change that made the usually placid Hackbarth dig in his heels — how to remedy shortages in primary care physicians seen as the key to improving the efficiency of health care at a time when rising health costs looming as a major threat to an already troubled economy.

The MedPAC style is collegial, not confrontational, but commissioner Nancy M. Kane made her feelings known to her colleagues that they had not done enough on primary care. "I really feel that primary care is in a state of crisis," said Kane, a professor of management at the Harvard School of Public Health. Kane lives in a state that has expanded health coverage, only to leave many newly insured Massachusetts residents with long waits to see primary care doctors.

She said MedPAC recommendations on the issue are tantamount to "a drop in the pond" when what is really needed is to "move a whole ocean." Kane expressed impatience with the idea of waiting many years for the results of an upcoming Medicare demonstration program testing whether assigning patients to primary care practice-based "medical homes" leads to cost savings and quality improvements. The demo involves paying primary care doctors $50 per member per month to coordinate treatment needs of the chronically ill, improve their preventive care, and to give them easier access to treatment through e-mail communication and expanded hours.

"Do we really have to wait for a demonstration? Let's get moving on this," Kane said. "It's time to fix it. And it's time to fix it at the same level of urgency" that policy makers showed several years ago in adding prescription drug coverage to Medicare, she said. "I would love to see this commission take a stand at that level of urgency, rather than say that there's something that might happen some day in the future once we know all the facts. That's just not the right standard of evidence on this kind of problem."

Commissioner Francis J. Crosson, a physician-executive with the Kaiser Permanente Medical Group, agreed with Kane that the measures recommended thus far by MedPAC fall short of addressing the magnitude of the problem. Crosson also challenged the wording of a recommendation proposed by Hackbarth that "the Congress should update payments for physician services in 2010 by the projected change in input prices less the Commission's productivity goal."

MedPAC's forecast of input price inflation for 2010 is 2.4 percent and the commission's goal for improvements in productivity is 1.3 percent — in other words, MedPAC is pushing doctors to lower their costs through productivity gains and so recommends subtracting the 1.3 percent from the 2.4 percent to yield a payment update of 1.1 percent.

Crosson argued that the productivity adjustment makes no sense for primary care doctors whose work is their "hands, and time, and mind" used in trying to diagnose and manage medical conditions. Crosson called for rewording the proposed recommendation to make the payment update to doctors concurrent with a payment adjustment for doctors mainly involved in primary care. The change would entail dropping the productivity adjustment, Crosson said.

That elicited Hackbarth's comment that he wouldn't support anything above 1.1 percent, noting that increases in payments to doctors drive Part B premiums higher for beneficiaries already struggling to pay for health care and alluding to doctors as a "well-compensated part of the population." Hackbarth reminded commissioners that the productivity adjustment is a prod to make care more efficient in a society in which the elderly are increasingly facing financial difficulty.

Unmentioned was the enormous pressure MedPAC faces from Congress to avoid payment recommendations that worsen the fiscal crisis Medicare faces with the arrival in the program of the baby boomers. Even an added percentage point for doctors means billions in added Medicare spending.

Hackbarth noted earlier in the session that policy changes completed or in progress have increased payments to primary care physicians by 10.6 percent and that two newer MedPAC recommendations relating to primary care that the commission approved on Thursday would boost the rates another 10 percent to about 20 percent. Program-wide adoption of the medical home concept would mean payments on top of that, he said.

"It's not a totally bleak picture," he said. "It's not as rosy as I'd like it to be," but "things are happening."

In addition to voting to recommend the 1.1 percent increase for doctors generally, the commission voted to recommend anew a not-yet-adopted June 2008 recommendation that payments be increased for selected primary care services furnished by doctors and others in medical practices focused mainly on primary care. The adjustment would be made on a budget-neutral basis, meaning it would be paid for by paying less for other types of services.

The second recommendation related to primary care urges Congress to direct the Medicare program to "increase the equipment use standard for expensive imaging machines from 25 hours to 45 hours per week." That shift in effect would pay doctors less for imaging services in practices that use expensive machines such as CT, MRI and PET scanners less than 45 hours a week. The savings — an estimated $900 million in 2010 — would be shifted to payments for other physician services including primary care.

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