Publications
APS Bulletin • Volume 10, Number 1, January/February 2000
Pain and Public Policy
Michael A. Ashburn, MD and Corey D. Fox, PhD, Editors
1999 Brings Moderate Relief for Medicare Providers and Beneficiaries
Robert J. Saner, Esq.; Amy E. Bacon
The Balanced Budget Act of 1997 (BBA ’97) made extensive changes to the Medicare program and significantly cut funding to many providers in an attempt to strengthen the program and extend its solvency. As providers felt the pain in 1998 and 1999, federal policy-makers had second thoughts, and before adjourning last year, Congress approved legislation to revise portions of BBA ’97 and restore some funding cuts. The changes were targeted only on the most significant problems resulting from the BBA, and left its major policy reforms in place.
This “refinements” bill was incorporated into a large omnibus spending bill and signed into law as Public Law 106-113. Several provisions of this legislation will be of interest to pain practitioners.
Outpatient therapy caps
BBA ‘97 established an annual per-beneficiary payment cap of $1,500 for outpatient physical therapy and speech therapy, and a separate $1,500 cap for outpatient occupational therapy services. However, the Health Care Financing Administration (HCFA) was unable to implement the limits across provider sites, and the caps were roundly criticized for failing to account for severity of illness across beneficiaries. The recently enacted refinements bill places a 2-year moratorium on the outpatient therapy caps.
During this 2-year period, the Secretary is required to conduct focused medical reviews of therapy services, with particular emphasis on services provided to residents of skilled nursing facilities. The Secretary is also required to submit recommendations to Congress on the establishment of a mechanism for ensuring the appropriate use of therapy services and the establishment of an alternative payment policy in place of the $1,500 limitation for therapy services based on classification of individuals by diagnostic category, functional status, and previous use of both outpatient and inpatient services.
As a result of the moratorium on outpatient therapy caps, Medicare will pay its 80% share of therapy services without a dollar limit during calendar years 2000 and 2001. Payments for such services will be limited only by medical necessity.
Physician services
To limit oscillations in the annual update to the Medicare Fee Schedule, the refinements bill makes the following changes beginning in calendar year 2001: (a) future update adjustment factors will be calculated using data measured on a calendar year basis; (b) the formula for determining the update is modified by adding a new component to the formula to measure past-year variances from allowed spending growth; and (c) the year-to-year impact of these measures on the update is mitigated by the addition of dampening multipliers. These changes in the formula will improve the accuracy of physician payment updates and reduce year-to-year fluctuations in the update factor. Unfortunately, they will not significantly increase Medicare fees.
In determining practice expense relative values, the refinements bill requires the Secretary to establish a process under which the Secretary would accept for use and would use, to the maximum extent practicable and consistent with sound data practices, data collected by organizations and entities other than the Department of Health and Human Services. Congress is directing the Secretary to give fair consideration to data collected and submitted by external entities. This provision expresses Congress’ concern about instances in which HCFA may not have adequate data for accurate rate setting.
Hospice care
Hospice payments currently are based on four prospectively determined daily rates that correspond to levels of care. BBA ’97 reduced annual market basket updates to market basket minus 1% for fiscal years (FYs) 1999 through 2002. The refinement bill increases hospice payment rates by 0.5% in FY 2001 and by 0.75% in FY 2002. The Secretary is prohibited from including these additional payments in the updates of payment rates after FY 2002. The Secretary is required to collect data from hospices on the costs of care provided for each FY, beginning with FY 1999.
Disproportionate share hospital payments
Hospitals treating a disproportionate share of low-income Medicare and Medicaid patients receive additional payments from Medicare. BBA ’97 would have reduced disproportionate share hospital (DSH) payments by 3% in 2000, 4% in 2001, and 5% in 2002. The refinements bill freezes the 3% cut (FY 2000 level) for an additional year, defers the 4% cut to FY 2002, and eliminates future formulae cuts, at least until Congress revisits the issue.
Hospital outpatient services
The refinements bill eases the transition for hospitals switching to the Medicare outpatient prospective payment system (PPS) by setting payment floors for the early years of outpatient PPS. Small rural hospitals and cancer hospitals receive additional relief. Payment for certain drugs, devices, and biologicals continues on a cost basis for 3 years, and an outlier policy for high-cost cases is required.
Graduate medical education
Teaching hospitals were hit hard by BBA ‘97. The bill moderates cuts to indirect medical education payments for FY 2000 and beyond. At the same time, it seeks to further narrow the spread in direct graduate medical education (GME) payments between hospitals with very low and very high per-resident amounts, so not all teaching programs will receive relief. The bill also provides a break in the computation of GME payments for pediatric neurology residency programs and asks for further study with respect to other residency programs that effectively cross specialty lines.
Looking forward
The refinements bill will be a modest help to some beleaguered healthcare providers, largely by letting a bad situation get worse at a somewhat slower pace than that programmed into law in BBA ‘97. It does nothing, however, to fundamentally improve Medicare for the benefit of either patients or physicians. Those challenges lie ahead, and very likely will be deferred until after the 2000 elections. While the “reform“ rhetoric will be high in this session of Congress and on the campaign trail, pain practitioners should not expect significant Medicare legislation this year.
Robert J. Saner is a principal in the law firm of Powers, Pyles, Sutter, & Verville, P.C., and serves as Washington counsel to the Pain Care Coalition. Amy E. Bacon is legislative director of Powers, Pyles, Sutter & Verville, P.C.