Medical Device Daily Washington Editor

Congress opted to roll back the proposed reductions to Medicare Part B doctor’s fees in December, but the so-called “doc fix” is temporary because the sustainable growth rate mechanism is still in force at the Centers for Medicare & Medicaid Services.

The Congressional Budget Office (CBO) has compiled its estimates of the cost of the “fix,” and while the numbers won’t induce many heart attacks on Capitol Hill, Congress must nonetheless remain mindful of the words of the late Senator Everett Dirksen, who once pointed out that “a billion here and a billion there, and pretty soon you’re talking real money.”

Congress did manage to hold ground on the cuts to Medicare imaging under the Deficit Reduction Act of 2005, but the doc fix indicates that Congressional support for the imaging cuts may prove less than unflinching.

The CBO estimate includes a number of fiscal measures other than those related to Medicare. A measure to boost enrollment in health savings accounts was also in the bill, which the president signed into law as PL 109-432 on Dec. 20, and a brief review shows how complicated the budget process is when legislators have to appeal to voters while simultaneously trying to control spending.

Among the provisions dealing with health savings accounts (HSAs) is one that allows employees to roll over funds from flexible spending accounts and health reimbursement accounts into new HSAs. Another provision detaches the maximum tax-free contribution from the employee’s deductible, and a third provision allows an employee to enjoy the entire year’s worth of tax-free contributions regardless of the date of enrollment.

CBO anticipates that these and the other HSA changes will reduce Uncle Sam’s revenue by $23 million in fiscal 2007 and by $50 million the following fiscal year.

In fiscal 2009, the loss to the federal budget should be $64 million, and the amount inches up from there to peak at $212 million in 2016, the last year of the projection.

The CBO document states that these numbers were generated by the Joint Committee on Taxation, a Congressional workgroup that was chaired by Sen. Chuck Grassley (R-Iowa), the outgoing chair of the Senate Finance committee.

As for Medicare Part B outlays for physician services, CBO says that spending should increase by $1.8 billion in FY07 and by $1.3 billion in FY08 and FY11 for a total of $3.1 billion by 2016. However, 2007 and 2008 are nothing more than a grace period for doctors because the sustainable growth rate mechanism is still in place at CMS.

Other provisions of the Act will boost spending on the Part B doctor quality initiative by a total of about $1.4 billion by 2016, for a total increase to docs under Part B expected to come to just a bit more than $5 billion. Other provisions of the Act will increase payments for dialysis by about $1.1 billion over 10 years as well as spending on contractors who will perform audits for Medicare, expected to add up to $4.4 billion over the term of the projection.

David Merritt, project director at the Center for Health Transformation (Washington), told Medical Device Daily that Congress does not look forward to the next round of Medicare fisticuffs.

“My guess is that if Congress had its druthers, it would kick the can down another year,” Merritt said.

The Medicare Payment Advisory Commission (MedPAC) has gone on record as saying that the SGR approach, though not ideal, may be the best mechanism currently available.

However, Merritt said that “[w]hat MedPAC has also said is that we should look more closely at P4P, and I think that’s where the whole system needs to go.” He argued that the current approach to delivery of medical services has so warped the ability to determine value that “nobody knows the true value of any service and neither does HHS.

“Whey they’re taking 5%, they could be taking 10%, so absent any fundamental change in the way we pay for healthcare,” there will be no fix for the budgetary dilemma presented by Medicare. Merritt said that he could not project whether a Democrat majority in the House would go after the cuts to Medicare imaging that survived the 109th Congress.

The American Medical Association (Washington) informed Congress in no uncertain terms that doctors would bail out on Medicare work if the 5% reductions held. But CMS has a couple of surveys that doctors responded to anonymously, and it said they indicate that most intend to continue to take Medicare patients.

Congress is aware of this, and Merritt acknowledged that the lobbying by AMA is not an exercise in pure altruism.

“AMA will always argue that the sky will fall with any pay cut,” he said, but he countered with the assertion that “when reimbursement rates continue to drop, it doesn’t make any sense for them to continue to provide services.”

Merritt did not disagree with the proposition that the intensity of services presents budget-minded members of Congress with a serious dilemma, especially when such increases in utilization do not always correlate with improved outcomes.

“We need to move to a system that pays for outcomes” and not for services that doctors prescribe to cover their legal derrieres. “Absent any kind of fundamental reform, we’re going to see these games played, and they’ll look for ways to cut corners and cut costs, and it just happened that physicians are in line for cuts. With a Democratic Congress in place, insurers may be next,” he asserted.

Merritt said that he sees market forces as the best hope for reforming medical care in the U.S., including tort reform to cut down on defensive medicine. Prospects for tort reform “dimmed significantly on Nov. 7,” he said, but he pointed out that malpractice insurance premiums have “dropped dramatically” in Texas, which has implemented caps on damages in malpractice cases.

Overall, Merritt said that “[m]aking healthcare more like every other market is the way we need to go,” and that if Congress wants affordable healthcare for the U.S., “it absolutely has to happen.”