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    Pay freeze heads list of Medicare reforms

    AUA opposes possible expansion of payment advisory board


    Bob Gatty
    Washington—Urologists and other physicians who treat Medicare patients have again escaped a steep reimbursement reduction as President Obama on Dec. 15 signed legislation passed by the lame-duck Congress providing a 12-month reprieve.

    The Medicare and Medicaid Extenders Act of 2010 postpones sustainable growth rate (SGR)-mandated cuts in Medicare reimbursement levels through 2011, with the stated goal of providing Congress breathing room so it can fashion a permanent solution to this recurring problem.

    Had Congress not acted, a 24.9% slash in rates would have become effective Jan. 1.

    Regardless, the long-term issue remains to be resolved. Currently, recommendations for a more permanent solution have been issued by the National Commission on Fiscal Responsibility and Reform, a bipartisan group created by President Obama in 2010 that is charged with "identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run."

    The Commission's report, issued Dec. 1, proposes these key provisions as they relate to Medicare physician payments:

    • Freeze physician payments from 2012 through 2020, at a cost of $267 billion relative to current law, replacing scheduled reductions with the freeze, except for a 1% cut in 2014.
    • Direct the Centers for Medicare & Medicaid Services (CMS) to develop an improved physician payment formula that encourages care coordination across multiple providers and settings and pays doctors based on quality instead of quantity of services.
    • Maintain pressure to establish a new system and limit physician payment costs. The SGR formula, which currently requires the annual reductions, would be reinstated in 2015 until CMS develops a revised system. If that occurred, 2014 spending would be used as the base year. The Medicare actuary would be required to certify that the new payment system would not cost more than payments under the SGR formula.

    To help pay for these changes, which the Commission said would cost about $22 billion less than simply continuing to freeze physician payments, the Commission's recommendations included:

    • Increase government authority and funding to reduce Medicare fraud, estimated to save $1 billion in 2015 and $9 billion through 2020.
    • Require beneficiaries to pay more by imposing a combined annual $550 deductible for Part A and Part B, along with 20% uniform coinsurance on health spending above the deductible. The coinsurance rate would drop to 5% after costs exceed $5,500 total cost sharing capped at $7,500. This is estimated to save $10 billion in 2015 and $110 billion through 2020.
    • Restrict first-dollar coverage in Medicare supplemental insurance, prohibiting plans from covering the first $500 of an enrollee's cost-sharing liabilities and limiting coverage to 50% of the next $5,000 in Medicare cost sharing. Estimated savings: $4 billion in 2015, $38 billion through 2020.
    • Extend Medicaid drug rebates to those who are also eligible for Medicare and who receive coverage through Medicare Part D. Estimated savings: $7 billion in 2015, $49 billion through 2020.
    • Reduce excess payments to hospitals for medical education, estimated to save $6 billion in 2015 and $60 billion through 2020.
    • Cut Medicare payments for bad debts, including unpaid deductibles and co-pays owed by beneficiaries. Savings estimated at $3 billion in 2015 and $23 billion through 2020.
    • Accelerate the home health savings provision of the Patient Protection and Affordable Care Act (ACA), for a savings of $2 billion in 2015 and $9 billion through 2020.


    Bob Gatty
    Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.


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