AAMC Letter to Thomas Scully
on Revisions to Payment Policies Under the Physician Fee Schedule
for Calendar Year 2003
August 27, 2002
Thomas A. Scully
Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Hubert H. Humphrey Building
200 Independence Avenue, Room 445-G
Washington, DC 20201
Re: Medicare Program; Revisions to Payment Policies Under
the Physician Fee
Schedule for Calendar Year 2003, Proposed Rule
Dear Administrator Scully:
The Association of American Medical Colleges (AAMC) is pleased
to submit comments on the Medicare Program; Revisions to Payment
Policies Under the Physician Fee Schedule for Calendar Year
2003, Proposed Rule. AAMC represents the country's 125 accredited
medical schools, approximately 400 major teaching hospitals
and health systems, 90 academic/professional societies, and
approximately 86,000 faculty members (academic physicians)
who are members of faculty practice plans.
Academic physicians play a unique, multifaceted role within
the physician community, as well as within the larger health
care system. In addition to their consultative, educational
and research roles, faculty members provide a significant
volume of services to Medicare beneficiaries. Nearly one-sixth
of all physicians providing Medicare services are academic
physicians. Medicare reimbursements to academic physicians
represent up to one-third of faculty practice plan revenues.
In light of the fact that faculty practice revenues, on average,
represent about 35 percent of a medical school's total revenue,
Medicare payments play a significant role in the fiscal health
of academic medicine.
Changes to the Physician Fee Schedule Update Calculation
and the Sustainable Growth Rate (SGR)
Medicare Economic Index (MEI)
AAMC appreciates CMS' proposal to modify the methodology
used to calculate the Medicare Economic Index (MEI) to more
appropriately adjust for productivity in the inflation index.
The proposed change should produce more stable and predictable
adjustments. This approach will help to meet some of the objectives
of changes to the current system that have been outlined by
MedPAC and supported by AAMC and other physician organizations.
CMS' proposed change,
which will raise the estimated 2003 MEI update from 2.3% to
3.0%, will provide some minor relief to the projection of
a second year of notable reduction in the Conversion Factor.
Specifically, this increase in the MEI will result in a proposed
Conversion Factor change of
-4.4% instead of -5.1%.
Professional Liability Insurance (PLI)
The 11.3% change to the CY 2003 Professional Liability
Insurance (PLI) component of the MEI is notably above the CY
2002 figure of 3%. This increase reflects changes in the marketplace
and begins to account for the dramatic increases in malpractice
expenses borne by physicians in some parts of the country. However,
given that some academic institutions are reporting two to three-fold
increases in PLI expenses, and that the MEI/SGR systems do not
yield an actual 11% increase in payments, the net payments to
physicians may not be adequate to cover these expenses.
The PLI crisis has resulted in a recent HHS report on the
issue. CMS' data source for the PLI calculation, noted in
the Proposed Rule as "a CMS survey of several major insurers",
may need to be expanded to include other data, as available
either from CMS or from other sources.
Proposed Addition to the Definition of Medicare Telehealth
AAMC supports the addition of the psychiatric diagnostic
interview to the definition of Medicare telehealth services.
The components of the psychiatric diagnostic interview are
comparable to an initial office visit or consultation, which
are currently included as Medicare telehealth services. We
believe this expansion is consistent with Section 1834(m)
of the Act.
New HCPCS G Codes
CMS proposes the addition of several new G codes, including
those related to the treatment of peripheral neuropathy, Positron
Emission Tomography codes for breast imaging, Home Prothrombin
time, and for bone marrow aspiration and biopsy performed
on the same date of service.
Currently, there are complex and numerous requirements for
appropriately coding and documenting services provided to
Medicare patients. Given that the CPT code list already includes
over 7,500 codes, it is critical that the creation of new
G codes be limited. We strongly recommend that to the greatest
extent possible existing CPT codes be used.
The creation of some of these G codes is tied to CMS decisions
to include certain services as covered services under Medicare.
These specific decisions are of greater impact than the related
expansion of G codes. Specifically, any services deemed by
CMS to become covered services should be included in projected
growth in expenditures expected from "changes in law
and regulation", not just those changes resulting from
specific legislative acts. On one level it is helpful to physicians
to be able to treat Medicare patients who have coverage for
a broad array of medically necessary services. This obviates
the need for physicians to explain to patients that services
are indicated but coverage is not available. However, it is
not helpful to have physicians indirectly pay for that coverage
by excluding those services from projected volume growth levels.
Under the SGR system, this means that anticipated expenditures
for such services do not yield increases in the projected
target-spending amount, but actual payments are included in
the determination of actual expenditures. Thus, when actual
to target expenditures are compared, the likely result is
a downward adjustment of future years' payments to physicians
in order to get actual and target figures back in alignment.
CMS' treatment of expenditures related to drugs results in
a similar situation and needs to be reevaluated. Drugs are
not included under the physician fee schedule. However, the
actual expenditures for drugs are included in target spending
calculations. The explanation for the inclusion of drug expenditures
in the calculation of actual expenditures has been that it
is necessary for ensuring that physicians, who control drug
prescribing, do not unnecessarily or inappropriately prescribe
drugs. We do not believe that physicians are unnecessarily
or inappropriately prescribing drugs and no data have been
produced to date to indicate such patterns. The physician
community would welcome data on specific trends in this realm
that indicate patterns of prescribing that might be addressed
by professional education or other efforts.
Finally, we would also encourage CMS to reexamine its position
on its inability to correct enrollment and GDP projection
errors from 1998 and 1999. It is estimated that the cumulative
nature of the SGR system has yielded a loss of $20.4 billion
in payments to physicians up through CY 2002. Correction of
these errors would not only be fair, but would also help to
address some of the concerns raised by physicians relative
to the CY 2002 payment reduction
(-5.4%) and the currently projected CY 2003 reduction (-4.4%).
The AAMC appreciates the opportunity to comment on the Revisions
to Payment Policies Under the Physician Fee Schedule for Calendar
Year 2003, Proposed Rule.
Sincerely,
Jordan J. Cohen, M.D.
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