Washington Highlights: April 21,
2006
Contents
Prior Issues
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Brownback Introduces Health Care Transparency
Legislation
Sen. Sam Brownback (R-Kan.) April 7 introduced the "Medicare
Payment Rate Disclosure Act" (S.
2606), which would "create price transparency at a consumer
level, allowing Americans to choose for themselves health care services
that are affordable and within their region." The bill would
require the official Medicare website to post the average payment
rates for the 30 most frequent Medicare inpatient hospital procedures,
outpatient hospital procedures, and physician services for each
Metropolitan Statistical Area or other payment area.
Specifically, the legislation would require that the services'
average rates be posted "without regard to the application
of any deduction or coinsurance amount" or specific payment
adjustments, including the Medicare Indirect Medical Education payments
or Disproportionate Share Hospital payments. Eventually the rates
would be expanded to include the 100 most frequent Medicare inpatient
and outpatient hospital services or Medicare physician services.
The bill provides the Secretary of HHS with the authority to expand
"the selection" further. The website would also include
descriptions of the items and services included in each of the procedures.
Sen. Tom Coburn (R-Okla.) is an original cosponsor of the bill.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
MedPAC Discusses New Specialty Hospital Data
At its April 19-20 meeting,
the Medicare Payment Advisory Commission (MedPAC) discussed updated
staff analyses examining physician-owned specialty hospitals. MedPAC
previously had done significant analyses as part of a legislatively
mandated report on specialty hospitals that was released in March
2005.
MedPAC staff noted that while the number of specialty hospitals
nearly doubled between 2002 and 2004, from 46 to 89, results of
utilization and financial analyses using 2004 data are similar to
those from analyses conducted previously using 2002 data. They also
noted that while cardiac hospitals have costs similar to those of
community hospitals, orthopedic and surgical hospitals are significantly
more expensive. Higher costs appear to be due to much lower patient
volume and unused patient capacity in orthopedic and surgical hospitals — the
typical specialty hospital has 14 beds and an occupancy rate of
28 percent. Commissioners noted that the orthopedic and surgical
hospitals seemed to be much more like ambulatory surgical centers
than traditional hospitals. All specialty hospitals have shorter
than expected lengths of stay and much lower Medicaid shares (3
percent for heart hospitals and 2 percent for orthopedic and surgical
hospitals, compared with 13 percent for community hospitals).
Cardiac hospital-specific analyses indicate that these hospitals
appear to cause an increase in cardiac service utilization in the
markets in which they exist, although the actual cause for the increase
is not definitively known. As in the past, the findings indicate
that cardiac hospitals continue to divert patients from community
hospitals thereby causing a decline in community hospitals' Medicare
revenue. Although the analyses also indicate that there is no significant
impact on community hospitals' total revenue, this is because community
hospitals appear to expand other revenue sources.
The general consensus among the Commission members was that there
is no current need to attempt to eliminate physician-owned specialty
hospitals, because there is no "compelling" evidence to
support such a decision. Chairman Glenn Hackbarth noted his bias
for competition and emphasized that the solution for leveling the
playing field between specialty and community hospitals is changing
the Medicare inpatient diagnosis-related group (DRG) payment methodology
to eliminate incentives for these hospitals to treat less severe,
more profitable Medicare patients. Making this change was the primary
recommendation in the Commission's March 2005 Report. In the FY
2007 Medicare inpatient rule [see Washington
Highlights, April 14], CMS is proposing changes similar
to what MedPAC had recommended.
In other areas the Commission discussed:
Physician payment issues (see related article); A potential wage index methodology using data for all employers
rather than hospital data only; -
Medicare Part D prescription formularies, and;
Medicare Advantage and Special Needs Plans with an emphasis on coordination
of care.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
Diana Mayes, Specialist
AAMC Health Care Affairs
dmayes@aamc.org
(202) 828-0498
MedPAC Discusses Physician Payments and Resource
Use
At its April 19-20 meeting, MedPAC reviewed an April 7 CMS letter (PDF)
informing the Commission that the update to the 2007 physician fee
schedule is projected to be negative 4.6 percent. The projected
negative update results from increased growth in physician services-especially
in imaging and laboratory services-and a statutory requirement that
physician services growth be compared to the national GDP.
MedPAC commented about its continuing work to address "mispricing"
in physician payments, including reviewing the methods for updating
the components of physician payments (physician work, practice expenses,
and geographic cost variation), measuring physician resource use,
and proposing alternatives to the SGR formula for a report due to
Congress in March 2007. In a March 2006 report, MedPAC recommended
that the update to physician payments be the change in input costs
minus productivity, which is estimated to be 2.8 percent for 2007.
To evaluate physician and inpatient resource-based measures, staff
compared variability of resource metrics assumptions and claims-based
quality metrics across Metropolitan Statistical Areas. Staff also
examined the impact of risk-adjusted methodology on physician resource
scores. Some key findings are:
- resource scores can vary substantially depending on the unit of
analysis (i.e. per-capita or episode treatment of care);
- quality performance, as a combination of individual metrics, can
depend on weighting methodology of the individual measures; and
- sample size problems exist due to low incidence and low eligibility.
Information:
Mary Patton, Senior Specialist
AAMC Health Care Affairs
mpatton@aamc.org
(202) 862-6297
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