PPAC Addresses Physician
Payment Issues
May 23, 2003 - The Practicing Physicians Advisory
Council (PPAC) met May 19 to review several topics of importance
related to the Medicare Physician Fee Schedule and the Sustainable
Growth Rate System (SGR), Stark II and Medicare beneficiary
access.
Earlier this year, at the time of legislative changes allowing
the Centers for Medicare and Medicaid Services (CMS) to address
past problems with SGR data that resulted in a Calendar Year
2003 Conversion Factor (CF) update of 1.6 percent, CMS announced
positive update projections to the CF for the next few years.
However, in a March 17 letter to MedPAC, CMS announced that
large increases in volume and costs of services in 2002 caused
them to alter their projections from several years of positive
updates to several years of negative updates, including an
estimated 4.2 percent decrease in the CF for 2004.
PPAC members heard reports regarding the specific components
of the SGR that contributed to the overall volume and spending
increases that are triggering the estimated 4.2 percent cut
in the conversion factor for 2004. A 25 percent increase in
drug costs in 2002 was the most significant increase among
the factors contributing to the negative CF update projections.
This revelation spurred discussion regarding the appropriateness
of the inclusion of drugs in the SGR for physician services,
since drugs are included in the calculation of the Physician
Fee Schedule expenditure targets, but are not included under
the Physician fee schedule itself. This issue has been prominent
among ongoing advocacy efforts by the AAMC, the AMA and physician
specialty societies over the past year. The AAMC testified
on this issue at the February 2003 PPAC meeting [see Washington
Highlights, Feb. 14, 2003].
In addition to the concerns over the SGR methodology, PPAC
also raised concerns about the use of general population wages
in the calculation of the Medicare Economic Index (MEI). PPAC
recommended: (1) that general population wages be replaced
with health care worker wages in the MEI; (2) the replacement
of the SGR with a method that keeps pace with actual increases
in the cost of practicing medicine, beginning with a 2.5 percent
increase in 2004; and, (3) a study of the impact of increasing
utilization of non-facility services that have traditionally
been facility services.
PPAC members also heard a report from MedPAC staff on beneficiary
access that was based on the MedPAC March 2003 report.
MedPAC's beneficiary access study indicates that despite cuts
in the conversion factor, beneficiaries have not experienced
problems gaining access to health care. CMS, the Center for
the Study of Health System Change (HSC) and the American Medical
Association are also studying the access issue, each using
a different methodology.
Other issues of importance included discussions of Stark
II, HIPAA privacy concerns, and a system to ensure that new
regulations are automatically placed on the PPAC meeting agenda.
PPAC made one recommendation related to these topics, suggesting
that lithotripsy should not be designated as a health service,
thereby excluding lithotripsy from Stark II provisions.
Richard Chard <rchard@aamc.org> or
Denise Dodero, Associate Vice President
AAMC Health Care Affairs
ddodero@aamc.org
(202) 828-0493
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