ASCRS Alert 08-06

TO: All ASCRS Members

Date: August 2, 2007

H.R. 3162, THE CHILDREN’S HEALTH AND
MEDICARE PROTECTION (CHAMP) ACT OF 2007,
PASSES THE HOUSE OF REPRESENTATIVES

On Wednesday, August 1, 2007, the House of Representatives passed a modified version of H.R. 3162, the CHAMP Act by a vote of 225 to 204. As we have previously reported, this legislation reauthorizes and expands the State Children’s Health Insurance Program (SCHIP) and prevents the projected total Medicare physician payment reductions of 15% over the next 2 years (10% in 2008; 5% in 2009) by providing a statutory Medicare physician payment update of 0.5% in 2008 and 2009.

To comply with the new pay/go rules, which require that the 5- and 10-year budget window costs of the legislation do not exceed its offsets, the Democratic leadership had to scale back the long term (10-year cost) of the SCHIP, Medicare beneficiary, and physician payment provisions. As a result, the spending over 10 years for the Medicare physician payment provision was reduced from $102 billion to $67 billion.

MEDICARE PHYSICIAN PAYMENT PROVISIONS

Provides a positive update in 2008 and 2009 of 0.5% (These positive updates are paid for in the legislation.)

Physicians would face reductions of 11% to 12 % in 2010 and 2011 because of a change in the update adjustment factor floor, which is currently Medicare Economic Index
(MEI) -7%. In 2010 and 2011, this will change to MEI -14%. It then returns to
MEI -7% in 2012 and beyond.

Six separate service-specific expenditure targets would be implemented in 2010. However, the target for primary care and prevention services would be Gross Domestic Product (GDP) +2.5% rather than the original proposal, which was GDP +3%.

The conversion factors for all 6 categories of services would be frozen at the 2012 rate from 2013 to 2017, which is the end of the budget window. (A change from the original proposal in order to meet the pay/go rule.)

Prospectively removes drugs administered in a physician’s office from the physician payment formula in 2010.

Note: Projections for 2010 and beyond should be viewed with the understanding that new legislation will be pursued in 2009 to avert these reductions. Ways and Means Committee Chairman Charles Rangel (D-NY) and Health Subcommittee Chairman Pete Stark (D-CA), as well as Energy and Commerce Chairman John Dingell (D-MI) and Health Subcommittee Chairman Frank Pallone (D-NJ) have indicated that this is temporary and expressed their desire to work with the physician community to resolve this issue.

ADDITIONAL PHYSICIAN PROVISIONS

Establishes an "expert" panel to oversee the RUC to identify "over-valued" services
Physician feedback mechanism on practice patterns
Provides a 5% bonus for Medicare physicians practicing in counties in the lowest 5th percentile of per capita spending
Expands the medical home demonstration project
Repeals the bonus payment for the Physician Quality Reporting Initiative (PQRI) in 2008
Includes certification and accreditation requirements for imaging equipment and facilities
Gives the Secretary of Health and Human Services (HHS) the authority to reduce payments for services that grow by 10 percentage points more than overall growth in physician spending
Prohibits self referral to hospitals in which a physician has an ownership interest, with grandfather provisions
Within the Agency for Healthcare Research and Quality, establishes a Center for Comparative Effectiveness Research to conduct research on the outcomes, effectiveness, and appropriateness of health care services
Requires the Centers for Medicare and Medicaid Services (CMS) to develop a plan to implement a health information technology system for Medicare
Requires the Secretary to designate a national entity to coordinate development of healthcare measures for all health care providers; names the National Quality Forum (NQF) as an example

OUTLOOK

While the legislation contains many positive needed changes for which we have advocated, we have some concerns that must be addressed as we move forward in the negotiation process. The Senate has begun debate on their SCHIP package and is scheduled to vote before the August recess. As we have previously reported, this bill does not include a Medicare physician payment provision. (Senate Finance Committee Chairman Max Baucus [D-MT] indicated that he plans to introduce a bill in September to address the physician payment reductions.) The bills will have to be reconciled in a conference, which will be quite contentious. The Senate pays for their SCHIP package with a much higher tobacco tax and does not cut Medicare Advantage plans. The House bill, which includes both SCHIP and Medicare changes, including physician payment, is funded with a much lower tobacco tax, but also reduces reimbursement to Medicare Advantage plans. In addition, the President is threatening to veto both the Senate and House packages due to the expansion of the SCHIP program.

Despite these concerns, is very important to continue to move the process forward. ASCRS and the physician community will continue to work together with members of Congress to achieve the best possible results for you and your patients. We will continue to keep you updated. You can access the legislation and the final roll call vote by going to the ASCRS website. If you have any questions, please contact Nancey McCann, ASCRS Director of Government Relations, at nmccann@ascrs.org.


		URGENT GRASSROOTS ALERT
		TO: All ASCRS Members Date: August 2, 2007 H.R. 3162, THE CHILDREN’S HEALTH AND MEDICARE PROTECTION (CHAMP) ACT OF 2007, PASSES THE HOUSE OF REPRESENTATIVES On Wednesday, August 1, 2007, the House of Representatives passed a modified version of H.R. 3162, the CHAMP Act by a vote of 225 to 204. As we have previously reported, this legislation reauthorizes and expands the State Children’s Health Insurance Program (SCHIP) and prevents the projected total Medicare physician payment reductions of 15% over the next 2 years (10% in 2008; 5% in 2009) by providing a statutory Medicare physician payment update of 0.5% in 2008 and 2009. To comply with the new pay/go rules, which require that the 5- and 10-year budget window costs of the legislation do not exceed its offsets, the Democratic leadership had to scale back the long term (10-year cost) of the SCHIP, Medicare beneficiary, and physician payment provisions. As a result, the spending over 10 years for the Medicare physician payment provision was reduced from $102 billion to $67 billion. MEDICARE PHYSICIAN PAYMENT PROVISIONS Provides a positive update in 2008 and 2009 of 0.5% (These positive updates are paid for in the legislation.) Physicians would face reductions of 11% to 12 % in 2010 and 2011 because of a change in the update adjustment factor floor, which is currently Medicare Economic Index (MEI) -7%. In 2010 and 2011, this will change to MEI -14%. It then returns to MEI -7% in 2012 and beyond. Six separate service-specific expenditure targets would be implemented in 2010. However, the target for primary care and prevention services would be Gross Domestic Product (GDP) +2.5% rather than the original proposal, which was GDP +3%. The conversion factors for all 6 categories of services would be frozen at the 2012 rate from 2013 to 2017, which is the end of the budget window. (A change from the original proposal in order to meet the pay/go rule.) Prospectively removes drugs administered in a physician’s office from the physician payment formula in 2010. Note: Projections for 2010 and beyond should be viewed with the understanding that new legislation will be pursued in 2009 to avert these reductions. Ways and Means Committee Chairman Charles Rangel (D-NY) and Health Subcommittee Chairman Pete Stark (D-CA), as well as Energy and Commerce Chairman John Dingell (D-MI) and Health Subcommittee Chairman Frank Pallone (D-NJ) have indicated that this is temporary and expressed their desire to work with the physician community to resolve this issue. ADDITIONAL PHYSICIAN PROVISIONS Establishes an "expert" panel to oversee the RUC to identify "over-valued" services Physician feedback mechanism on practice patterns Provides a 5% bonus for Medicare physicians practicing in counties in the lowest 5th percentile of per capita spending Expands the medical home demonstration project Repeals the bonus payment for the Physician Quality Reporting Initiative (PQRI) in 2008 Includes certification and accreditation requirements for imaging equipment and facilities Gives the Secretary of Health and Human Services (HHS) the authority to reduce payments for services that grow by 10 percentage points more than overall growth in physician spending Prohibits self referral to hospitals in which a physician has an ownership interest, with grandfather provisions Within the Agency for Healthcare Research and Quality, establishes a Center for Comparative Effectiveness Research to conduct research on the outcomes, effectiveness, and appropriateness of health care services Requires the Centers for Medicare and Medicaid Services (CMS) to develop a plan to implement a health information technology system for Medicare Requires the Secretary to designate a national entity to coordinate development of healthcare measures for all health care providers; names the National Quality Forum (NQF) as an example OUTLOOK While the legislation contains many positive needed changes for which we have advocated, we have some concerns that must be addressed as we move forward in the negotiation process. The Senate has begun debate on their SCHIP package and is scheduled to vote before the August recess. As we have previously reported, this bill does not include a Medicare physician payment provision. (Senate Finance Committee Chairman Max Baucus [D-MT] indicated that he plans to introduce a bill in September to address the physician payment reductions.) The bills will have to be reconciled in a conference, which will be quite contentious. The Senate pays for their SCHIP package with a much higher tobacco tax and does not cut Medicare Advantage plans. The House bill, which includes both SCHIP and Medicare changes, including physician payment, is funded with a much lower tobacco tax, but also reduces reimbursement to Medicare Advantage plans. In addition, the President is threatening to veto both the Senate and House packages due to the expansion of the SCHIP program. Despite these concerns, is very important to continue to move the process forward. ASCRS and the physician community will continue to work together with members of Congress to achieve the best possible results for you and your patients. We will continue to keep you updated. You can access the legislation and the final roll call vote by going to the ASCRS website. If you have any questions, please contact Nancey McCann, ASCRS Director of Government Relations, at nmccann@ascrs.org.