Jennifer Silverman

Pay-for-Performance Principles

Any “pay-for-performance” program should offer voluntary physician participation and foster the relationship between physician and patient, the American Medical Association asserted in a new set of principles for such programs. Such programs also should use accurate data and fair reporting, provide program incentives, and ensure quality of care, the AMA stated. If done improperly, “some so-called pay-for-performance programs are a lose-lose proposition for patients and their physicians with the only benefit accruing to health insurers,” AMA Secretary John H. Armstrong, M.D., said in a statement. Both private and public sector organizations have started offering incentive payments to physicians based on an appraisal of their performance. Before taking on such reforms, however, Congress should try to fix Medicare's flawed payment formula, according to recent AMA testimony.

Views on Physician-Assisted Suicide

More than half of physicians in a national survey say they believe it's ethical to assist a patient in committing suicide. Of the 1,000 physicians surveyed in the national poll, about 57% said it was ethical and 39% said it was unethical. In addition, 41% of the physicians surveyed would endorse the legalization of physician-assisted suicide under a wide variety of circumstances, while 30% support its legalization in a few cases and 29% oppose legalizing it in all cases. Although many physicians support physician-assisted suicide as a public policy, the results were mixed when it came to whether they would personally participate in an assisted suicide. About 46% said they would not assist a patient for any reason, 34% said they would assist a patient in a few cases, and 20% said they would assist under a wide variety of circumstances. The survey was conducted by HCD Research, a marketing and communications research company, and the Louis Finkelstein Institute for Social and Religious Research.

Perceptions of the Drug Industry

Prescription drugs may be improving patients' lives, but 70% of 1,201 adults polled in a Kaiser Family Foundation survey thought the drug industry cared more about profits than people. Only 24% thought the companies were most concerned with developing new drugs that save lives and improve quality of life. People also blame drug companies for rising health care costs: Nearly 60% said prescription drugs increased overall medical costs because they were so expensive, compared with the 23% who said drugs lowered medical costs by reducing the need for expensive medical procedures and hospitalizations. In an earlier poll, Kaiser found that people were more likely to cite drug company profits than other causes as the major cost of rising health care. While not as popular as physicians or hospitals, drug companies were in fact viewed more favorably than oil or tobacco companies, according to the survey.

Cost of New Drug Benefit

National health care spending costs will remain stable over the next 10 years, although public programs will account for half of total spending, in part because of the new Medicare Part D prescription drug benefit, according to a report by the Centers for Medicare and Medicaid Services. The agency claims that the drug benefit—which kicks in in January—is expected to “significantly” increase prescription drug use and reduce out-of-pocket spending for older patients without causing any major increase in the health care spending trend. However, the new benefit will result in a significant shift in funding from private payers and Medicaid to Medicare. Medicare spending is projected to grow almost 8% in 2004 and 8.5% in 2005, due to several changes in the program under the Medicare Modernization Act, such as positive physician updates and higher Medicare Advantage payment rates.

Clinical Trial Registry Legislation

Sen. Chuck Grassley (R-Iowa) and Sen. Christopher Dodd (D-Conn.) have introduced legislation to require drug makers to register clinical trials about prescription medicines. The bill is similar to legislation Sen. Dodd introduced in the last Congress, but it stipulates that

www.clinicaltrials.gov

Legislating Sex Education

Democrats in Congress are offering an alternative to the Bush Administration's proposal to spend $206 million on abstinence-only education. Rep. Barbara Lee (D-Calif.) and Sen. Frank Lautenberg (D-N.J.) have introduced the Responsible Education About Life Act (H.R. 768) that would provide funding to states for programs that include information about both abstinence and contraception. The bill would create a grant program administered by the Health and Human Services Department that would award $206 million each year to states for comprehensive sex education. There are three federal programs that fund abstinence-only-until-marriage programs, but no federal funding currently exists specifically for comprehensive programs, according to Rep. Lee.

Pay-for-Performance Principles

Any “pay-for-performance” program should offer voluntary physician participation and foster the relationship between physician and patient, the American Medical Association asserted in a new set of principles for such programs. Such programs also should use accurate data and fair reporting, provide program incentives, and ensure quality of care, the AMA stated. If done improperly, “some so-called pay-for-performance programs are a lose-lose proposition for patients and their physicians with the only benefit accruing to health insurers,” AMA Secretary John H. Armstrong, M.D., said in a statement. Both private and public sector organizations have started offering incentive payments to physicians based on an appraisal of their performance. Before taking on such reforms, however, Congress should try to fix Medicare's flawed payment formula, according to recent AMA testimony.

Views on Physician-Assisted Suicide

More than half of physicians in a national survey say they believe it's ethical to assist a patient in committing suicide. Of the 1,000 physicians surveyed in the national poll, about 57% said it was ethical and 39% said it was unethical. In addition, 41% of the physicians surveyed would endorse the legalization of physician-assisted suicide under a wide variety of circumstances, while 30% support its legalization in a few cases and 29% oppose legalizing it in all cases. Although many physicians support physician-assisted suicide as a public policy, the results were mixed when it came to whether they would personally participate in an assisted suicide. About 46% said they would not assist a patient for any reason, 34% said they would assist a patient in a few cases, and 20% said they would assist under a wide variety of circumstances. The survey was conducted by HCD Research, a marketing and communications research company, and the Louis Finkelstein Institute for Social and Religious Research.

Perceptions of the Drug Industry

Prescription drugs may be improving patients' lives, but 70% of 1,201 adults polled in a Kaiser Family Foundation survey thought the drug industry cared more about profits than people. Only 24% thought the companies were most concerned with developing new drugs that save lives and improve quality of life. People also blame drug companies for rising health care costs: Nearly 60% said prescription drugs increased overall medical costs because they were so expensive, compared with the 23% who said drugs lowered medical costs by reducing the need for expensive medical procedures and hospitalizations. In an earlier poll, Kaiser found that people were more likely to cite drug company profits than other causes as the major cost of rising health care. While not as popular as physicians or hospitals, drug companies were in fact viewed more favorably than oil or tobacco companies, according to the survey.

Cost of New Drug Benefit

National health care spending costs will remain stable over the next 10 years, although public programs will account for half of total spending, in part because of the new Medicare Part D prescription drug benefit, according to a report by the Centers for Medicare and Medicaid Services. The agency claims that the drug benefit—which kicks in in January—is expected to “significantly” increase prescription drug use and reduce out-of-pocket spending for older patients without causing any major increase in the health care spending trend. However, the new benefit will result in a significant shift in funding from private payers and Medicaid to Medicare. Medicare spending is projected to grow almost 8% in 2004 and 8.5% in 2005, due to several changes in the program under the Medicare Modernization Act, such as positive physician updates and higher Medicare Advantage payment rates.

Clinical Trial Registry Legislation

Sen. Chuck Grassley (R-Iowa) and Sen. Christopher Dodd (D-Conn.) have introduced legislation to require drug makers to register clinical trials about prescription medicines. The bill is similar to legislation Sen. Dodd introduced in the last Congress, but it stipulates that

www.clinicaltrials.gov

Legislating Sex Education

Democrats in Congress are offering an alternative to the Bush Administration's proposal to spend $206 million on abstinence-only education. Rep. Barbara Lee (D-Calif.) and Sen. Frank Lautenberg (D-N.J.) have introduced the Responsible Education About Life Act (H.R. 768) that would provide funding to states for programs that include information about both abstinence and contraception. The bill would create a grant program administered by the Health and Human Services Department that would award $206 million each year to states for comprehensive sex education. There are three federal programs that fund abstinence-only-until-marriage programs, but no federal funding currently exists specifically for comprehensive programs, according to Rep. Lee.

Pay-for-Performance Principles

Any “pay-for-performance” program should offer voluntary physician participation and foster the relationship between physician and patient, the American Medical Association asserted in a new set of principles for such programs. Such programs also should use accurate data and fair reporting, provide program incentives, and ensure quality of care, the AMA stated. If done improperly, “some so-called pay-for-performance programs are a lose-lose proposition for patients and their physicians with the only benefit accruing to health insurers,” AMA Secretary John H. Armstrong, M.D., said in a statement. Both private and public sector organizations have started offering incentive payments to physicians based on an appraisal of their performance. Before taking on such reforms, however, Congress should try to fix Medicare's flawed payment formula, according to recent AMA testimony.

Views on Physician-Assisted Suicide

More than half of physicians in a national survey say they believe it's ethical to assist a patient in committing suicide. Of the 1,000 physicians surveyed in the national poll, about 57% said it was ethical and 39% said it was unethical. In addition, 41% of the physicians surveyed would endorse the legalization of physician-assisted suicide under a wide variety of circumstances, while 30% support its legalization in a few cases and 29% oppose legalizing it in all cases. Although many physicians support physician-assisted suicide as a public policy, the results were mixed when it came to whether they would personally participate in an assisted suicide. About 46% said they would not assist a patient for any reason, 34% said they would assist a patient in a few cases, and 20% said they would assist under a wide variety of circumstances. The survey was conducted by HCD Research, a marketing and communications research company, and the Louis Finkelstein Institute for Social and Religious Research.

Perceptions of the Drug Industry

Prescription drugs may be improving patients' lives, but 70% of 1,201 adults polled in a Kaiser Family Foundation survey thought the drug industry cared more about profits than people. Only 24% thought the companies were most concerned with developing new drugs that save lives and improve quality of life. People also blame drug companies for rising health care costs: Nearly 60% said prescription drugs increased overall medical costs because they were so expensive, compared with the 23% who said drugs lowered medical costs by reducing the need for expensive medical procedures and hospitalizations. In an earlier poll, Kaiser found that people were more likely to cite drug company profits than other causes as the major cost of rising health care. While not as popular as physicians or hospitals, drug companies were in fact viewed more favorably than oil or tobacco companies, according to the survey.

Cost of New Drug Benefit

National health care spending costs will remain stable over the next 10 years, although public programs will account for half of total spending, in part because of the new Medicare Part D prescription drug benefit, according to a report by the Centers for Medicare and Medicaid Services. The agency claims that the drug benefit—which kicks in in January—is expected to “significantly” increase prescription drug use and reduce out-of-pocket spending for older patients without causing any major increase in the health care spending trend. However, the new benefit will result in a significant shift in funding from private payers and Medicaid to Medicare. Medicare spending is projected to grow almost 8% in 2004 and 8.5% in 2005, due to several changes in the program under the Medicare Modernization Act, such as positive physician updates and higher Medicare Advantage payment rates.

Clinical Trial Registry Legislation

Sen. Chuck Grassley (R-Iowa) and Sen. Christopher Dodd (D-Conn.) have introduced legislation to require drug makers to register clinical trials about prescription medicines. The bill is similar to legislation Sen. Dodd introduced in the last Congress, but it stipulates that

www.clinicaltrials.gov

Legislating Sex Education

Democrats in Congress are offering an alternative to the Bush Administration's proposal to spend $206 million on abstinence-only education. Rep. Barbara Lee (D-Calif.) and Sen. Frank Lautenberg (D-N.J.) have introduced the Responsible Education About Life Act (H.R. 768) that would provide funding to states for programs that include information about both abstinence and contraception. The bill would create a grant program administered by the Health and Human Services Department that would award $206 million each year to states for comprehensive sex education. There are three federal programs that fund abstinence-only-until-marriage programs, but no federal funding currently exists specifically for comprehensive programs, according to Rep. Lee.

WASHINGTON — President Bush's 2006 budget request includes several initiatives to get providers to adopt standards-based, interoperable electronic health records systems.

The Agency for Healthcare Research and Quality (AHRQ) is currently directing $14 million of this year's budget to jump-start regional collaborations that would assist health care providers in employing these types of systems. To continue these activities outside of AHRQ in 2006, the budget proposal includes a new $75 million account in the Office of the National Coordinator for Health Information Technology.

Although primary care groups have shown a great deal of interest in a national information technology (IT) health care network, language in the budget isn't likely to affect the individual physician's office—at least not directly, Robert Tennant, senior policy advisor for the Medical Group Management Association (MGMA), said in an interview.

"This will be targeted to the local health information networks that David J. Brailer [the federal coordinator for health IT] has been promoting. That's very different from promoting use in an individual practice," Mr. Tennant said at the annual conference of the National Academy of Social Insurance.

The hope is these initiatives will produce a network to enhance patient care and encourage practices to spend the money on infrastructures that would link them to this type of network, Mr. Tennant said.

The fact that Dr. Brailer's office is received funding at all means that this issue is on the president's radar screen, "considering that appropriations had eliminated funding for the program in 2005," Bob Doherty, senior vice president for governmental affairs and public policy with the American College of Physicians, said in an interview.

Primary care groups such as the ACP and the American Academy of Family Physicians have been actively promoting the use of IT systems to improve the quality of care. Both are collaborating with health care contractors on a federal project to test financial incentives and technology support to improve care of patients with chronic disease.

In 2004, the ACP released to Congress a plan for promoting a paperless system. According to the college, some of those ideas were recently incorporated into a bill introduced by Rep. John M. McHugh (R-N.Y.) and Rep. Charles Gonzales (D-Tex.) to encourage health care providers to adopt interoperable health care IT systems.

Although it's encouraging that the federal government has shown an interest in IT, Mr. Tennant noted that the proposed allocations in the 2006 budget proposal aren't nearly enough to promote its widespread use.

"To offer some perspective, one of MGMA's member practices just spent $140 million for an IT system. That's more than what the entire budget allocates for the country," he said.

WASHINGTON — President Bush's 2006 budget request includes several initiatives to get providers to adopt standards-based, interoperable electronic health records systems.

The Agency for Healthcare Research and Quality (AHRQ) is currently directing $14 million of this year's budget to jump-start regional collaborations that would assist health care providers in employing these types of systems. To continue these activities outside of AHRQ in 2006, the budget proposal includes a new $75 million account in the Office of the National Coordinator for Health Information Technology.

Although primary care groups have shown a great deal of interest in a national information technology (IT) health care network, language in the budget isn't likely to affect the individual physician's office—at least not directly, Robert Tennant, senior policy advisor for the Medical Group Management Association (MGMA), said in an interview.

"This will be targeted to the local health information networks that David J. Brailer [the federal coordinator for health IT] has been promoting. That's very different from promoting use in an individual practice," Mr. Tennant said at the annual conference of the National Academy of Social Insurance.

The hope is these initiatives will produce a network to enhance patient care and encourage practices to spend the money on infrastructures that would link them to this type of network, Mr. Tennant said.

The fact that Dr. Brailer's office is received funding at all means that this issue is on the president's radar screen, "considering that appropriations had eliminated funding for the program in 2005," Bob Doherty, senior vice president for governmental affairs and public policy with the American College of Physicians, said in an interview.

Primary care groups such as the ACP and the American Academy of Family Physicians have been actively promoting the use of IT systems to improve the quality of care. Both are collaborating with health care contractors on a federal project to test financial incentives and technology support to improve care of patients with chronic disease.

In 2004, the ACP released to Congress a plan for promoting a paperless system. According to the college, some of those ideas were recently incorporated into a bill introduced by Rep. John M. McHugh (R-N.Y.) and Rep. Charles Gonzales (D-Tex.) to encourage health care providers to adopt interoperable health care IT systems.

Although it's encouraging that the federal government has shown an interest in IT, Mr. Tennant noted that the proposed allocations in the 2006 budget proposal aren't nearly enough to promote its widespread use.

"To offer some perspective, one of MGMA's member practices just spent $140 million for an IT system. That's more than what the entire budget allocates for the country," he said.

WASHINGTON — President Bush's 2006 budget request includes several initiatives to get providers to adopt standards-based, interoperable electronic health records systems.

The Agency for Healthcare Research and Quality (AHRQ) is currently directing $14 million of this year's budget to jump-start regional collaborations that would assist health care providers in employing these types of systems. To continue these activities outside of AHRQ in 2006, the budget proposal includes a new $75 million account in the Office of the National Coordinator for Health Information Technology.

Although primary care groups have shown a great deal of interest in a national information technology (IT) health care network, language in the budget isn't likely to affect the individual physician's office—at least not directly, Robert Tennant, senior policy advisor for the Medical Group Management Association (MGMA), said in an interview.

"This will be targeted to the local health information networks that David J. Brailer [the federal coordinator for health IT] has been promoting. That's very different from promoting use in an individual practice," Mr. Tennant said at the annual conference of the National Academy of Social Insurance.

The hope is these initiatives will produce a network to enhance patient care and encourage practices to spend the money on infrastructures that would link them to this type of network, Mr. Tennant said.

The fact that Dr. Brailer's office is received funding at all means that this issue is on the president's radar screen, "considering that appropriations had eliminated funding for the program in 2005," Bob Doherty, senior vice president for governmental affairs and public policy with the American College of Physicians, said in an interview.

Primary care groups such as the ACP and the American Academy of Family Physicians have been actively promoting the use of IT systems to improve the quality of care. Both are collaborating with health care contractors on a federal project to test financial incentives and technology support to improve care of patients with chronic disease.

In 2004, the ACP released to Congress a plan for promoting a paperless system. According to the college, some of those ideas were recently incorporated into a bill introduced by Rep. John M. McHugh (R-N.Y.) and Rep. Charles Gonzales (D-Tex.) to encourage health care providers to adopt interoperable health care IT systems.

Although it's encouraging that the federal government has shown an interest in IT, Mr. Tennant noted that the proposed allocations in the 2006 budget proposal aren't nearly enough to promote its widespread use.

"To offer some perspective, one of MGMA's member practices just spent $140 million for an IT system. That's more than what the entire budget allocates for the country," he said.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, "physicians will be hard pressed to undertake quality initiatives such as information technology," testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), part of the physician pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, "it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish," Dr. Nielsen said.

Other medical organizations offered similar pleas in testimony and in statements to the subcommittee.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut "is unacceptable," Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told SKIN AND ALLERGY NEWS.

"We fundamentally have to rethink how we pay our doctors," said Subcommittee Chair Nancy L. Johnson (R-Conn.) at the hearing. Pay-for-performance proposals were heavily touted as a viable payment alternatives. Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system "fails to create appropriate incentives to improve performance," he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was "reluctant to get into the quality issue." As far as reforming payments, "I think it's up to the doctors to regulate themselves."

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. "Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant."

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, "we have steadily improved in targeted areas," such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said. The contracts cover the care of more than 500,000 primary care patients, and a number of referral patients to specialists.

Physicians Did Not Abandon Medicare

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

The findings also suggest that Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed—all of which are costly. GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means health subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the very least, Dr. McClellan's response "indicates that the payment issue is sharply on his radar screen," Paul Speidell, government affairs representative with the Medical Group Management Association, told SKIN AND ALLERGY NEWS.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, "physicians will be hard pressed to undertake quality initiatives such as information technology," testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), part of the physician pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, "it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish," Dr. Nielsen said.

Other medical organizations offered similar pleas in testimony and in statements to the subcommittee.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut "is unacceptable," Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told SKIN AND ALLERGY NEWS.

"We fundamentally have to rethink how we pay our doctors," said Subcommittee Chair Nancy L. Johnson (R-Conn.) at the hearing. Pay-for-performance proposals were heavily touted as a viable payment alternatives. Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system "fails to create appropriate incentives to improve performance," he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was "reluctant to get into the quality issue." As far as reforming payments, "I think it's up to the doctors to regulate themselves."

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. "Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant."

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, "we have steadily improved in targeted areas," such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said. The contracts cover the care of more than 500,000 primary care patients, and a number of referral patients to specialists.

Physicians Did Not Abandon Medicare

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

The findings also suggest that Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed—all of which are costly. GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means health subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the very least, Dr. McClellan's response "indicates that the payment issue is sharply on his radar screen," Paul Speidell, government affairs representative with the Medical Group Management Association, told SKIN AND ALLERGY NEWS.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, "physicians will be hard pressed to undertake quality initiatives such as information technology," testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), part of the physician pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, "it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish," Dr. Nielsen said.

Other medical organizations offered similar pleas in testimony and in statements to the subcommittee.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut "is unacceptable," Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told SKIN AND ALLERGY NEWS.

"We fundamentally have to rethink how we pay our doctors," said Subcommittee Chair Nancy L. Johnson (R-Conn.) at the hearing. Pay-for-performance proposals were heavily touted as a viable payment alternatives. Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system "fails to create appropriate incentives to improve performance," he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was "reluctant to get into the quality issue." As far as reforming payments, "I think it's up to the doctors to regulate themselves."

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. "Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant."

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, "we have steadily improved in targeted areas," such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said. The contracts cover the care of more than 500,000 primary care patients, and a number of referral patients to specialists.

Physicians Did Not Abandon Medicare

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

The findings also suggest that Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed—all of which are costly. GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means health subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the very least, Dr. McClellan's response "indicates that the payment issue is sharply on his radar screen," Paul Speidell, government affairs representative with the Medical Group Management Association, told SKIN AND ALLERGY NEWS.

WASHINGTON — Older patients are choosing their physician over the phone or using electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information online, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% said they understood the new law very well. More than half (53%) said they didn't have enough information about the law to understand how it would impact them personally. The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said. Seniors also cited Medicare offices, Web sites, or phone numbers (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information. Forty-three percent of the seniors who responded to the poll said they'd never heard of the 1-800 Medicare number, and 42% were aware of it but have never used it.

Only 6% of the respondents had heard of Medicare.gov, and 39% said they'd never heard of the Web site. For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview. "Many of the seniors do not have or know how to use computers." Those patients that did "told me that even if they went on the Web site they still were confused."

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they wouldn't mind obtaining the information in person from Medicare or Social Security offices. Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new benefits. "I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules," said Colette Willins, M.D., a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people. Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006. Nineteen percent said they would, 37% said they would not, and another 37% said they hadn't heard enough about the new benefit to decide.

Not all physicians are encouraging their patients to use the new Medicare benefit. "Our community health center has an innovative pharmacy program that makes medications so affordable that we counsel our patients not to participate in the Medicare plan," where they'll end up spending more money, Tillman Farley, M.D., a family physician at the Salud Family Health Center in Fort Lupton, Colo., told this newspaper.

Seniors who responded to the Kaiser survey thought low-income people would benefit the most from the new law. Fewer respondents thought it would help the typical Medicare beneficiary.

Only 34% thought it would be very or somewhat helpful to them, personally. "It does seem like a pretty difficult program to explain," Dr. Farley said.

WASHINGTON — Older patients are choosing their physician over the phone or using electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information online, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% said they understood the new law very well. More than half (53%) said they didn't have enough information about the law to understand how it would impact them personally. The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said. Seniors also cited Medicare offices, Web sites, or phone numbers (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information. Forty-three percent of the seniors who responded to the poll said they'd never heard of the 1-800 Medicare number, and 42% were aware of it but have never used it.

Only 6% of the respondents had heard of Medicare.gov, and 39% said they'd never heard of the Web site. For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview. "Many of the seniors do not have or know how to use computers." Those patients that did "told me that even if they went on the Web site they still were confused."

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they wouldn't mind obtaining the information in person from Medicare or Social Security offices. Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new benefits. "I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules," said Colette Willins, M.D., a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people. Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006. Nineteen percent said they would, 37% said they would not, and another 37% said they hadn't heard enough about the new benefit to decide.

Not all physicians are encouraging their patients to use the new Medicare benefit. "Our community health center has an innovative pharmacy program that makes medications so affordable that we counsel our patients not to participate in the Medicare plan," where they'll end up spending more money, Tillman Farley, M.D., a family physician at the Salud Family Health Center in Fort Lupton, Colo., told this newspaper.

Seniors who responded to the Kaiser survey thought low-income people would benefit the most from the new law. Fewer respondents thought it would help the typical Medicare beneficiary.

Only 34% thought it would be very or somewhat helpful to them, personally. "It does seem like a pretty difficult program to explain," Dr. Farley said.

WASHINGTON — Older patients are choosing their physician over the phone or using electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information online, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% said they understood the new law very well. More than half (53%) said they didn't have enough information about the law to understand how it would impact them personally. The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said. Seniors also cited Medicare offices, Web sites, or phone numbers (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information. Forty-three percent of the seniors who responded to the poll said they'd never heard of the 1-800 Medicare number, and 42% were aware of it but have never used it.

Only 6% of the respondents had heard of Medicare.gov, and 39% said they'd never heard of the Web site. For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview. "Many of the seniors do not have or know how to use computers." Those patients that did "told me that even if they went on the Web site they still were confused."

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they wouldn't mind obtaining the information in person from Medicare or Social Security offices. Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new benefits. "I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules," said Colette Willins, M.D., a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people. Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006. Nineteen percent said they would, 37% said they would not, and another 37% said they hadn't heard enough about the new benefit to decide.

Not all physicians are encouraging their patients to use the new Medicare benefit. "Our community health center has an innovative pharmacy program that makes medications so affordable that we counsel our patients not to participate in the Medicare plan," where they'll end up spending more money, Tillman Farley, M.D., a family physician at the Salud Family Health Center in Fort Lupton, Colo., told this newspaper.

Seniors who responded to the Kaiser survey thought low-income people would benefit the most from the new law. Fewer respondents thought it would help the typical Medicare beneficiary.

Only 34% thought it would be very or somewhat helpful to them, personally. "It does seem like a pretty difficult program to explain," Dr. Farley said.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the physician pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said. Other medical organizations offered similar pleas in testimony and in statements to the subcommittee.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. “Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant.”

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said.

The contracts cover the care of more than 500,000 primary care patients.

Doctors Have Not Abandoned Medicare

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

The findings also suggest that Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed—all of which are costly.

GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means Health Subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the very least, Dr. McClellan's response “indicates that the payment issue is sharply on his radar screen,” Paul Speidell, government affairs representative with the Medical Group Management Association, told this newspaper.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the physician pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said. Other medical organizations offered similar pleas in testimony and in statements to the subcommittee.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. “Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant.”

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said.

The contracts cover the care of more than 500,000 primary care patients.

Doctors Have Not Abandoned Medicare

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

The findings also suggest that Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed—all of which are costly.

GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means Health Subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the very least, Dr. McClellan's response “indicates that the payment issue is sharply on his radar screen,” Paul Speidell, government affairs representative with the Medical Group Management Association, told this newspaper.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the physician pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said. Other medical organizations offered similar pleas in testimony and in statements to the subcommittee.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. “Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant.”

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said.

The contracts cover the care of more than 500,000 primary care patients.

Doctors Have Not Abandoned Medicare

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

The findings also suggest that Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed—all of which are costly.

GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means Health Subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the very least, Dr. McClellan's response “indicates that the payment issue is sharply on his radar screen,” Paul Speidell, government affairs representative with the Medical Group Management Association, told this newspaper.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries estimate that physician payments could decline by over 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine, adding that measures should also be specialty specific.

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said.

The contracts cover care of more than 500,000 primary care patients, and a number of referral patients to specialists.

Even With Large Pay Cuts, Physicians Did Not Abandon Medicare in 2002

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

Findings also suggest Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed, all of which are costly.

GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means Health Subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the least, Dr. McClellan's response “indicates that the payment issue is sharply on his radar screen,” Paul Speidell, government affairs representative, Medical Group Management Association, told this newspaper.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries estimate that physician payments could decline by over 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine, adding that measures should also be specialty specific.

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said.

The contracts cover care of more than 500,000 primary care patients, and a number of referral patients to specialists.

Even With Large Pay Cuts, Physicians Did Not Abandon Medicare in 2002

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

Findings also suggest Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed, all of which are costly.

GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means Health Subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the least, Dr. McClellan's response “indicates that the payment issue is sharply on his radar screen,” Paul Speidell, government affairs representative, Medical Group Management Association, told this newspaper.

WASHINGTON — Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries estimate that physician payments could decline by over 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the pay formula that determines each year's update.

Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said.

Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified.

The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine, adding that measures should also be specialty specific.

In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

In addition, Partners has developed decision support to help guide physicians to more appropriate ordering of costly imaging tests. Early information indicates that the rate of rise for imaging is less than the national trend of 15%-18%, he said.

The contracts cover care of more than 500,000 primary care patients, and a number of referral patients to specialists.

Even With Large Pay Cuts, Physicians Did Not Abandon Medicare in 2002

Physicians did not run away from Medicare in 2002, despite a 5.4% cut to their payments, the Government Accountability Office reported.

In analyzing all Medicare physician claims for services provided from April 2000 to April 2002, the GAO found that the percentage of beneficiaries getting treatment actually increased—and that access increased in almost every part of the country.

For example, the percentage of beneficiaries receiving physician services during the month of April rose from 42% in 2000 to 46% in 2002.

Findings also suggest Medicare beneficiaries were less likely to be exposed to balanced billing over time, from 1.7% of claims in 2000 to 1.3% in 2002.

Since 2002, Congress has provided some temporary fixes to prevent further cuts to the fee schedule, although a 5.2% cut is expected in 2006, unless permanent measures are taken.

Several such permanent changes have been proposed, all of which are costly.

GAO has estimated that removing prescription drugs from the SGR this year—an option favored by some medical organizations—would fall short of providing the immediate fix that physicians want. Fees would continue to decline by about 5% per year from 2006 through 2010, before rendering a positive update in 2011.

The Bush administration does have current authority to remove the drugs from the formula, Bruce Steinwald, GAO's director for health care, economic and payment issues, recently testified at a hearing of the House Ways and Means Health Subcommittee.

Further, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, recently told reporters that his agency is working with the AMA to identify administrative actions to prevent the cuts.

At the least, Dr. McClellan's response “indicates that the payment issue is sharply on his radar screen,” Paul Speidell, government affairs representative, Medical Group Management Association, told this newspaper.

Hey Medicare: Drugs Aren't Cheap

The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.

Fiscal 2006 Budget Request

The president's 2006 budget request got mixed reviews from health care groups. Although some groups objected to a lack of appropriate funding for health professions programs, others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.

States Meet Their Match

States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.

Controversial Retiree Benefits

AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.

Proposed Wheelchair Rules Issued

In an effort to clarify the requirements, the Centers for Medicare and Medicaid Services has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.

A Level Playing Field for Hospitals

The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president announced in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” Aaron Krupp, senior counsel with the Medical Group Management Association, said. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, recently told reporters.

Hey Medicare: Drugs Aren't Cheap

The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.

Fiscal 2006 Budget Request

The president's 2006 budget request got mixed reviews from health care groups. Although some groups objected to a lack of appropriate funding for health professions programs, others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.

States Meet Their Match

States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.

Controversial Retiree Benefits

AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.

Proposed Wheelchair Rules Issued

In an effort to clarify the requirements, the Centers for Medicare and Medicaid Services has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.

A Level Playing Field for Hospitals

The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president announced in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” Aaron Krupp, senior counsel with the Medical Group Management Association, said. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, recently told reporters.

Hey Medicare: Drugs Aren't Cheap

The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.

Fiscal 2006 Budget Request

The president's 2006 budget request got mixed reviews from health care groups. Although some groups objected to a lack of appropriate funding for health professions programs, others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.

States Meet Their Match

States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.

Controversial Retiree Benefits

AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.

Proposed Wheelchair Rules Issued

In an effort to clarify the requirements, the Centers for Medicare and Medicaid Services has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.

A Level Playing Field for Hospitals

The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president announced in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” Aaron Krupp, senior counsel with the Medical Group Management Association, said. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, recently told reporters.

WASHINGTON—Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the physician pay formula that determines each year's update. Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said.

Other medical organizations offered similar pleas in testimony and in statements to the subcommittee. Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified. The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. “Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant.” In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

WASHINGTON—Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the physician pay formula that determines each year's update. Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said.

Other medical organizations offered similar pleas in testimony and in statements to the subcommittee. Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified. The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. “Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant.” In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

WASHINGTON—Congress should fix Medicare's payment formula before taking on any new reforms to pay physicians on the basis of quality, medical organizations testified at a hearing of the House Ways and Means health subcommittee.

If impending cuts to the fee schedule go into effect, “physicians will be hard pressed to undertake quality initiatives such as information technology,” testified Nancy H. Nielsen, M.D., trustee to the American Medical Association.

President Bush's budget request for fiscal year 2006 includes a scheduled 5.2% payment cut for physician services under Medicare. Actuaries have estimated that physician payments could decline by more than 30% through 2012, unless modifications are made to the sustainable growth rate (SGR), a component in the physician pay formula that determines each year's update. Although the AMA has engaged in its own evidence-based, quality improvement measures, “it is critical to replace the flawed physician payment formula to allow quality initiatives to flourish,” Dr. Nielsen said.

Other medical organizations offered similar pleas in testimony and in statements to the subcommittee. Going ahead with pay-for-performance initiatives but not changing the formula to stave off the 5.2% cut “is unacceptable,” Jerome B. Connolly, senior government relations representative with the American Academy of Family Physicians, told this newspaper.

At the hearing, pay-for-performance proposals were heavily touted as a viable payment alternative by witnesses and panel members alike. “We fundamentally have to rethink how we pay our doctors,” said Subcommittee Chair Nancy L. Johnson (R-Conn.).

Some physicians perform better than others in the quality of care they deliver, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), testified. The SGR system “fails to create appropriate incentives to improve performance,” he said. MedPAC in its March report to Congress recommended a quality incentive payment system for physicians under Medicare, using various types of information technology to manage patients.

Such an approach would establish exclusive performance standards and award physicians accordingly, while establishing standards to improve quality, he said.

Rep. Pete Stark (D-Calif.), the panel's ranking member, countered that he was “reluctant to get into the quality issue.” As far as reforming payments, “I think it's up to the doctors to regulate themselves.”

Any type of payment system that rewards providers by improving patient care and outcomes must not be punitive or used as a control for physician volume, said William F. Gee, M.D., a urologist from Lexington, Ky., who testified on behalf of the Alliance for Specialty Medicine.

Measures should also be specialty specific, he continued. “Some measures may be appropriate for some specialties, and not others. In some areas, particularly surgery, it can be difficult to keep quality measures up to date enough to be perceived as relevant.” In addition, the reporting of quality or efficiency indicators and health outcomes data could be administratively prohibitive to many physicians, especially those in small practices that don't have electronic health records, Dr. Gee testified.

There is some evidence that pay for performance can work, at least in the private sector. Since the implementation of three major pay-for-performance contracts with Partners Healthcare System in Boston, “we have steadily improved in targeted areas,” such as diabetes care, Thomas H. Lee, M.D., network president for the health care system, testified. The rate of rise in pharmacy spending under these contracts averaged about 5% in 2004, lower than the national average of 9%.

Hey Medicare: Drugs Aren't Cheap

The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.

Fiscal 2006 Budget Request

The president's 2006 budget request got mixed reviews from health care groups. Some groups objected to a lack of appropriate funding for health professions programs, while others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.

States Meet their Match

States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.

Controversial Retiree Benefits

AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.

Proposed Wheelchair Rules Issued

In an effort to clarify the requirements, CMS has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.

A Level Playing Field for Hospitals

The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president said in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” said Aaron Krupp, senior counsel with the Medical Group Management Association. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, told reporters.

Hey Medicare: Drugs Aren't Cheap

The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.

Fiscal 2006 Budget Request

The president's 2006 budget request got mixed reviews from health care groups. Some groups objected to a lack of appropriate funding for health professions programs, while others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.

States Meet their Match

States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.

Controversial Retiree Benefits

AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.

Proposed Wheelchair Rules Issued

In an effort to clarify the requirements, CMS has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.

A Level Playing Field for Hospitals

The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president said in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” said Aaron Krupp, senior counsel with the Medical Group Management Association. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, told reporters.

Hey Medicare: Drugs Aren't Cheap

The 10-year estimate for the coming Medicare Part D prescription drug benefit continues to grow. President Bush's 2006 budget request for the Department of Health and Human Services indicated the cost would total nearly $1.2 trillion by 2015. Yet, if the reduced spending on drug coverage under Medicaid is factored in, the total for the new benefit is $724 billion, Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services, told reporters. The Congressional Budget Office estimates that the cost will be slightly higher—$798 billion. Another CBO update of this projection is expected this month.

Fiscal 2006 Budget Request

The president's 2006 budget request got mixed reviews from health care groups. Some groups objected to a lack of appropriate funding for health professions programs, while others decried the $60 billion in proposed cuts to Medicaid over the next 10 years. The Association of American Medical Colleges is opposed to cuts “that will further stretch the already taut health care safety net provided by teaching hospitals and medical school physicians,” Jordan Cohen, AAMC president, said in a statement. Although pleased with a $300 million boost for community health centers, Daniel Hawkins of the National Association of Community Health Centers noted that proposed cuts to Medicaid and the National Health Service Corps presented a funding conflict. Not everyone was unhappy with the budget: The American Medical Association praised the budget's efforts to fund tax credit initiatives and expand health savings accounts.

States Meet their Match

States have been known to recycle payments returned by health care providers, using them to draw down additional federal dollars for Medicaid—and the feds are tired of it. The administration's budget request seeks to curb such tactics, by only matching those funds kept by health care providers as payment for services. Current law also allows states to make Medicaid payments to health care providers that are far in excess of the actual cost of services. According the president's budget request, states use this additional money to leverage federal reimbursements in excess of their Medicaid matching rate or for other purposes. To halt this misuse of funds, the government proposes to limit reimbursement levels to no more than the cost of providing services. Both proposals are expected to save $5.9 billion over 5 years. “None of these efforts should affect the way physicians get paid under Medicaid,” Department of Health and Human Services spokesman Bill Pierce said in an interview.

Controversial Retiree Benefits

AARP is rejoicing now that a federal judge has temporarily blocked a new rule from the Equal Employment Opportunity Commission (EEOC) regarding retiree health benefits, but some members of Congress are not. The rule, which the commission approved last April, exempts employers from age discrimination laws when it comes to designing retiree health benefits. The EEOC says the rule is designed to enable employers to better coordinate retiree benefits with Medicare, but AARP says the rule simply makes it easier for employers to reduce health benefits for older retirees, or abandon them altogether. EEOC chair Cari Dominguez said that “any delay in implementing the rule endangers vital protections for retirees.” Rep. John Boehner (R-Ohio), chairman of the House Committee on Education and the Workforce, issued a statement saying that “if the AARP is successful with its lawsuit, it will surely cause more workers to lose their retiree health coverage.” The judge's action, issued in early February, prevents the rule from being implemented for at least 60 days.

Proposed Wheelchair Rules Issued

In an effort to clarify the requirements, CMS has issued proposed new rules for coverage of wheelchairs for Medicare beneficiaries. Previously, coverage was given to patients who were “nonambulatory” or “bed or chair confined.” Under the proposed rules, providers must state whether the patient “has a mobility limitation that prevents him or her from performing one or more mobility-related activities of daily living.” The agency also plans to require a face-to-face meeting between the provider and the patient before a scooter or wheelchair can be ordered. Fraud has been an issue for CMS lately regarding power wheelchair coverage: The agency launched Operation Wheeler Dealer in late 2003 after finding that expenditures for power wheelchairs had increased 450% over a 4-year period.

A Level Playing Field for Hospitals

The Bush administration plans to refine the inpatient hospital payment system “to ensure a more level playing field between specialty and nonspecialty hospitals,” the president said in his fiscal year 2006 budget request for HHS. The Medicare Payment Advisory Commission has reported that specialty hospitals tend to treat relatively lower-severity patients within them, and lower shares of Medicaid patients. Yet “it's unclear what the effect of these specialty hospitals will be,” said Aaron Krupp, senior counsel with the Medical Group Management Association. “One thing MedPAC didn't look at was the quality of services for specialty versus regular hospitals. That angle would be informative,” said Mr. Krupp, whose organization supports a free market system. “We are going to have a lot more to say on specialty hospitals in the coming months,” when HHS releases its own report, Mark McClellan, M.D., CMS administrator, told reporters.

WASHINGTON—Older patients are choosing their physician over the phone or electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information online, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% said they understood the new law very well. More than half (53%) said they didn't have enough information about the law to understand how it would impact them personally. The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said.

Seniors also cited Medicare offices, Web sites, or phone number (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information. Of the seniors who responded to the poll, 43% said they'd never heard of the 1-800 Medicare number, and 42% were aware of it but have never used it.

Only 6% of the respondents said they had heard of Medicare.gov, and 39% said they'd never heard of the Web site. For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview. “Many of the seniors do not have or know how to use computers.” Those patients that did “told me that even if they went on the Web site they still were confused.”

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they would not mind obtaining the information in person from Medicare or Social Security offices. Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new benefits. “I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules,” said Colette Willins, M.D., a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people. Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006. Nineteen percent said they would, 37% said they would not, and another 37% said they hadn't heard enough about the new benefit to decide.

Not all physicians are encouraging their patients to use the new Medicare benefit. “Our community health center has an innovative pharmacy program that makes medications so affordable that we counsel our patients not to participate in the Medicare plan,” where they'll end up spending more money, Tillman Farley, M.D., a family physician at the Salud Family Health Center in Fort Lupton, Colo., told this newspaper.

Seniors who responded to the Kaiser survey thought low-income people on Medicare would benefit the most from the new law, although fewer respondents thought it would help the typical Medicare beneficiary.

Only 34% thought it would be very or somewhat helpful to them, personally. “It does seem like a pretty difficult program to explain,” Dr. Farley said.

WASHINGTON—Older patients are choosing their physician over the phone or electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information online, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% said they understood the new law very well. More than half (53%) said they didn't have enough information about the law to understand how it would impact them personally. The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said.

Seniors also cited Medicare offices, Web sites, or phone number (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information. Of the seniors who responded to the poll, 43% said they'd never heard of the 1-800 Medicare number, and 42% were aware of it but have never used it.

Only 6% of the respondents said they had heard of Medicare.gov, and 39% said they'd never heard of the Web site. For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview. “Many of the seniors do not have or know how to use computers.” Those patients that did “told me that even if they went on the Web site they still were confused.”

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they would not mind obtaining the information in person from Medicare or Social Security offices. Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new benefits. “I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules,” said Colette Willins, M.D., a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people. Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006. Nineteen percent said they would, 37% said they would not, and another 37% said they hadn't heard enough about the new benefit to decide.

Not all physicians are encouraging their patients to use the new Medicare benefit. “Our community health center has an innovative pharmacy program that makes medications so affordable that we counsel our patients not to participate in the Medicare plan,” where they'll end up spending more money, Tillman Farley, M.D., a family physician at the Salud Family Health Center in Fort Lupton, Colo., told this newspaper.

Seniors who responded to the Kaiser survey thought low-income people on Medicare would benefit the most from the new law, although fewer respondents thought it would help the typical Medicare beneficiary.

Only 34% thought it would be very or somewhat helpful to them, personally. “It does seem like a pretty difficult program to explain,” Dr. Farley said.

WASHINGTON—Older patients are choosing their physician over the phone or electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information online, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% said they understood the new law very well. More than half (53%) said they didn't have enough information about the law to understand how it would impact them personally. The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said.

Seniors also cited Medicare offices, Web sites, or phone number (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information. Of the seniors who responded to the poll, 43% said they'd never heard of the 1-800 Medicare number, and 42% were aware of it but have never used it.

Only 6% of the respondents said they had heard of Medicare.gov, and 39% said they'd never heard of the Web site. For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview. “Many of the seniors do not have or know how to use computers.” Those patients that did “told me that even if they went on the Web site they still were confused.”

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they would not mind obtaining the information in person from Medicare or Social Security offices. Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new benefits. “I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules,” said Colette Willins, M.D., a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people. Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006. Nineteen percent said they would, 37% said they would not, and another 37% said they hadn't heard enough about the new benefit to decide.

Not all physicians are encouraging their patients to use the new Medicare benefit. “Our community health center has an innovative pharmacy program that makes medications so affordable that we counsel our patients not to participate in the Medicare plan,” where they'll end up spending more money, Tillman Farley, M.D., a family physician at the Salud Family Health Center in Fort Lupton, Colo., told this newspaper.

Seniors who responded to the Kaiser survey thought low-income people on Medicare would benefit the most from the new law, although fewer respondents thought it would help the typical Medicare beneficiary.

Only 34% thought it would be very or somewhat helpful to them, personally. “It does seem like a pretty difficult program to explain,” Dr. Farley said.