December 20, 2007

TO:                  AACE MEMBERS

FROM:             JONATHAN D. LEFFERT, MD, FACP, FACE
                       CHAIR, LEGISLATIVE & REGULATORY COMMITTEE

SUBJECT:        CONGRESS PASSES MEDICARE PHYSICIAN PAYMENT FIX

Congress has blocked the 10.1% Medicare Sustainable Growth Rate (SGR) physician payment cut scheduled to occur on January 1st by giving final approval yesterday to legislation that provides a six-month positive 0.5% Medicare payment update through June 30, 2008.  The President is expected to sign this legislation.  Our understanding from the Centers for Medicare and Medicaid Services (CMS) is that once the legislation is signed into law, physicians will have 45 days to decide if they want to change their participation status in the Medicare program.

Congress had hoped to provide a one or two year Medicare SGR physician payment fix, however agreement could not be reached on ways to pay for a more expensive Medicare package.  The modest bill approved by Congress is partially paid for by freezing the update to inpatient rehabilitation facilities between April 1, 2008 and October 1, 2009 and using $1.5 billion from the Medicare Advantage stabilization fund established by Congress a few years ago.  Although there was interest in cutting payments to Medicare Advantage plans as a way to pay for the physician fix, the veto threats issued by the White House were enough to protect the Medicare Advantage plans from cuts in the final legislation.

The final legislation also contains a provision setting the reimbursement rate for CPT® code 83037 – Hemoglobin; glycosylated (A1C) by device cleared by FDA for home use, at the rate paid for CPT® code 83036 - Hemoglobin; glycosylated (A1C) effective April 1, 2008.  We will have to calculate what the 2008 payment rates will be with the change in the conversion factor and the budget neutrality adjustment, but based on the 2007 payment rates, payment for CPT® code 83037 could be reduced by around 36% if reimbursed at the rate for CPT® code 83036.

Other provisions in the legislation of interest:

• Extends a provision that provides a 5% bonus payment to physicians practicing in physician shortage areas for six months (through June 30, 2008)
• Extends the work geographic index (GPCI) floor of 1.0 for six-months (through June 30, 2008)
• Extends the Physician Quality Reporting Initiative (PQRI) bonus payments of 1.5% for allowed charges through 2008.
• Extends the State Children’s Health Insurance Program (SCHIP) through March 31, 2009 and provides adequate funding to maintain current enrollment.
• Extends the Special Diabetes Program through September 30, 2009 to fund type 1 diabetes research and type 2 treatment and prevention programs for Native Americans and Alaska Natives.

 

Interest had been expressed in addressing the Medicare payment cuts for DXA bone density scans; however a remedy for DXA was not included in the final bill.  AACE will continue to work to secure passage of H.R. 4206 which will restore Medicare payments for DXA to the 2006 payment level.  AACE will also continue to work in consultation with the AMA to secure a long-term solution to the flawed Medicare SGR physician payment formula.  Attached to this email for your information is a statement from the AMA on the legislation approved by Congress.  Additional details about the legislation will be provided upon further review.