Fixing the physician payment system
Paul A. Raslavicus, MD
Washington is a city of politics. There is a lot of dancing around.
There is simultaneous handholding and backstabbing. When our members,
supported by our staff, enter this dance floor to represent the interests
of pathologists, there is a lot of two-steps-forward, one-step-back
motion. But worse things can happen. There’s not moving forward, for
one. There’s interference from others who are not well versed in the
political art or the underlying needs of our specialty, for another.
There’s losing sight of the big picture, for a third, and expending
resources on something that has no chance of becoming reality.
The 107th Congress went home last December. The Senate, hung up
on the appropriate drug benefit for Medicare beneficiaries and jerked
in other directions by the hospital lobby, failed to act on a House-passed
bill that would have provided a reasonable drug benefit to our seniors
and would have canceled the scheduled decrease in payment to physicians
under part B of Medicare. Even the Centers for Medicare and Medicaid
Services has realized that this formula for calculating the payment
amount is flawed and warrants a change. But without congressional
authorization to correct the admittedly erroneous input data, CMS
has felt hamstrung.
Those mistakes—overestimating physician productivity, including
the cost of some outpatient drugs in the physician target, and overestimating
the number of Medicare beneficiaries that would enroll in lower-cost
managed care plans and thus underestimating the cost of their care
under the fee schedule—compound every year that they persist.
They caused last year’s 5.4 percent cut in physician fees and are
predicted to reduce payments by another 12 percent from 2003 to
2005, leaving Medicare payments to physicians in 2005 below 1991
levels. (At CAP TODAY press time, there were signs that the new
Congress might act to avert a scheduled March 1 cut in 2003 payments.)
At that rate of backward acceleration the options of not participating
in Medicare or going to totally private contracting are worthy of
consideration by some practitioners—raising the specter of
lack of access to needed care for our seniors.
And now comes a step forward for pathology. The predictions for
us, because of recalculations involving the technical and professional
components, were even more gloomy. Observers said there was to be
a 6.4 percent decrease for pathologists and a -12.4 percent for
independent labs in 2003 alone. Instead, we argued that the direct
practice expense costs were being underestimated and a more thorough
study was needed. CMS has agreed with our position and has granted
a one-year moratorium to allow time for the CAP to lead a study.
So instead of seeing such decreases, we see only a 35-cent decrease
in the value of 88305 while the technical component value for this
code is held constant. All in all, we will be no worse off than
other physicians in 2003. The mandated general physician decrease
of 4.4 percent was announced on Dec. 31 (what a New Year’s present!)
to go into effect on March 1. My hopes are high that the new Congress
and the Republican majority—with a concerted push by the College
and others— will correct the system and provide physicians
some relief. The health needs of the elderly must be met.
By far this should not be the winter of our discontent. While
we continue to address physician payment and appropriate conversion
factors, we are pleased with the outcome of a number of our advocacy
initiatives. The CMS ruling of Dec. 31 shows significant increases
in the technical components for frozen sections, flow cytometry,
and immunofluorescent studies, and there will be a nine percent
increase in physician interpretation of cytogenetic studies.
On the matter of part A payment, last August I urged the Office
of Inspector General of Health and Human Services to revise its
hospital guidelines to clearly state that the fraud and abuse compliance
requirements include a fair market value payment requirement for
medical direction and supervision of hospital clinical laboratories.
It is our position that no payment or token payment for pathologists’
medical direction and supervision services in exchange for permitting
them to do surgical pathology violates the anti-kickback statute.
While we await the OIG’s decision, we are pleased to see that at
the meeting of the American Medical Association, the initiatives
of the California Society of Pathologists and California Medical
Association on this issue were successful. Thanks to the significant
contribution of our members and staff who developed the report for
the AMA’s Council on Medical Services, the AMA is now on record
as being in concert with the CAP’s policy. The AMA will be an advocate
for appropriate pay for pathologists for their services to Medicare
patients in the clinical laboratories of our hospitals.
On another matter, and because of the College’s efforts, in the
closing days of December, the CMS announced an administrative decision
to extend the grandfather provision for payment of the technical
component to independent laboratories for work they do for hospital
patients. Sixty-one members of the House signed a letter we organized
and sent to the CMS director asking for the delay. We now have additional
time to work on making this grandfather clause permanent. It will
help a number of pathologists and hundreds of their hospitals that
have had such arrangements for years.
We have also finally seen the lifting of the freeze on the clinical
lab fee schedule, which was in effect for the last five years. A
1.1 percent increase is not what we had hoped for, but at least
it is a step forward. Looking ahead, we intend to participate in
a consensus-driven process, recommended by the Institute of Medicine,
to revamp the now archaic test fee schedule to reflect more accurately
the costs of providing lab testing in various settings.
Yes, we pathologists have faced serious challenges in the last
20 years. We have been optimists; we have met the challenges, and
we have addressed them. We have won many battles, and we have learned
to live with some downsides. Because we do believe in the glorious
mission of medicine and the dedication of our pathology practitioners
to patients, the end of our concerns is not in sight. We are the
vanguard for quality in patient care; we seek just compensation
for our efforts. Reaching these ideals will take time, compromise,
and patience. But that’s OK. We will do the job. Our stubborn optimism will prove out.