Jennifer Silverman

WASHINGTON — A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies. Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution.

“It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur,” she said.

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, CMS could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said. Providers who bill for unbundled or multiple imaging procedures would experience a decrease in Medicare payments, though it's not anticipated that this would affect their willingness and ability to provide quality care to beneficiaries, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients. The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., president of the American College of Cardiology, who criticized MedPAC for recommending “restrictive tactics” to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

In a statement, he asked that policy makers take more time to look at this issue and evaluate the long-term health benefits of this technology, in addition to the immediate costs.

WASHINGTON — A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies. Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution.

“It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur,” she said.

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, CMS could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said. Providers who bill for unbundled or multiple imaging procedures would experience a decrease in Medicare payments, though it's not anticipated that this would affect their willingness and ability to provide quality care to beneficiaries, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients. The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., president of the American College of Cardiology, who criticized MedPAC for recommending “restrictive tactics” to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

In a statement, he asked that policy makers take more time to look at this issue and evaluate the long-term health benefits of this technology, in addition to the immediate costs.

WASHINGTON — A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies. Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution.

“It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur,” she said.

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, CMS could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said. Providers who bill for unbundled or multiple imaging procedures would experience a decrease in Medicare payments, though it's not anticipated that this would affect their willingness and ability to provide quality care to beneficiaries, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients. The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., president of the American College of Cardiology, who criticized MedPAC for recommending “restrictive tactics” to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

In a statement, he asked that policy makers take more time to look at this issue and evaluate the long-term health benefits of this technology, in addition to the immediate costs.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality. At press time, the recommendations were scheduled to appear in MedPAC's March report to Congress.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said. “However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay for performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored.”

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson said.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures.”

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care. “Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality. At press time, the recommendations were scheduled to appear in MedPAC's March report to Congress.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said. “However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay for performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored.”

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson said.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures.”

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care. “Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality. At press time, the recommendations were scheduled to appear in MedPAC's March report to Congress.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said. “However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay for performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored.”

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson said.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures.”

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care. “Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year, but later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and lower shares of Medicaid patients. So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a January meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not, effectively placing a moratorium on their construction. The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium. “This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict of interest concerns,” he said.

In other recommendations slated for MedPAC's March report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. Case-mix measurement and outlier policies should be developed over a transitional period.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year, but later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and lower shares of Medicaid patients. So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a January meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not, effectively placing a moratorium on their construction. The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium. “This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict of interest concerns,” he said.

In other recommendations slated for MedPAC's March report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. Case-mix measurement and outlier policies should be developed over a transitional period.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year, but later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and lower shares of Medicaid patients. So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a January meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not, effectively placing a moratorium on their construction. The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium. “This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict of interest concerns,” he said.

In other recommendations slated for MedPAC's March report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. Case-mix measurement and outlier policies should be developed over a transitional period.

WASHINGTON — A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies. Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution. “It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur.”

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, CMS could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said. Providers who bill for unbundled or multiple imaging procedures would experience a decrease in Medicare payments, though it's not anticipated that this would affect their willingness and ability to provide quality care to beneficiaries, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients. The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., president of the American College of Cardiology, who criticized MedPAC for recommending “restrictive tactics” to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

In a statement, he asked that policy makers take more time to look at this issue and evaluate the long-term health benefits of this technology, in addition to the immediate costs.

WASHINGTON — A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies. Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution. “It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur.”

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, CMS could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said. Providers who bill for unbundled or multiple imaging procedures would experience a decrease in Medicare payments, though it's not anticipated that this would affect their willingness and ability to provide quality care to beneficiaries, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients. The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., president of the American College of Cardiology, who criticized MedPAC for recommending “restrictive tactics” to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

In a statement, he asked that policy makers take more time to look at this issue and evaluate the long-term health benefits of this technology, in addition to the immediate costs.

WASHINGTON — A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies. Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution. “It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur.”

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, CMS could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said. Providers who bill for unbundled or multiple imaging procedures would experience a decrease in Medicare payments, though it's not anticipated that this would affect their willingness and ability to provide quality care to beneficiaries, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients. The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., president of the American College of Cardiology, who criticized MedPAC for recommending “restrictive tactics” to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

In a statement, he asked that policy makers take more time to look at this issue and evaluate the long-term health benefits of this technology, in addition to the immediate costs.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year, but later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and lower shares of Medicaid patients. So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a recent meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

To date, there's only a small sample of institutions to work on, and “we don't have a strong analytic foundation [on which] to base efficiency. With regard to quality, we haven't looked at that at all,” he said. MedPAC should readdress the issue in the future, however, “so that we could craft rules to get us the best competition without compromising clinical judgment,” Mr. Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not, effectively placing a moratorium on their construction.

The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium. “This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict of interest concerns,” he said.

In other recommendations slated for MedPAC's upcoming report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should amend the law to give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. In addition, case-mix measurement and outlier policies should be developed over a transitional period.

▸ HHS should also have the authority to regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year, but later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and lower shares of Medicaid patients. So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a recent meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

To date, there's only a small sample of institutions to work on, and “we don't have a strong analytic foundation [on which] to base efficiency. With regard to quality, we haven't looked at that at all,” he said. MedPAC should readdress the issue in the future, however, “so that we could craft rules to get us the best competition without compromising clinical judgment,” Mr. Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not, effectively placing a moratorium on their construction.

The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium. “This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict of interest concerns,” he said.

In other recommendations slated for MedPAC's upcoming report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should amend the law to give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. In addition, case-mix measurement and outlier policies should be developed over a transitional period.

▸ HHS should also have the authority to regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year, but later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and lower shares of Medicaid patients. So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a recent meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

To date, there's only a small sample of institutions to work on, and “we don't have a strong analytic foundation [on which] to base efficiency. With regard to quality, we haven't looked at that at all,” he said. MedPAC should readdress the issue in the future, however, “so that we could craft rules to get us the best competition without compromising clinical judgment,” Mr. Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not, effectively placing a moratorium on their construction.

The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium. “This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict of interest concerns,” he said.

In other recommendations slated for MedPAC's upcoming report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should amend the law to give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. In addition, case-mix measurement and outlier policies should be developed over a transitional period.

▸ HHS should also have the authority to regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality. At press time, the recommendations were scheduled to appear in MedPAC's March report to Congress.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said. “However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay for performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored.”

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson said.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures.

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care. “Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality. At press time, the recommendations were scheduled to appear in MedPAC's March report to Congress.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said. “However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay for performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored.”

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson said.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures.

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care. “Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality. At press time, the recommendations were scheduled to appear in MedPAC's March report to Congress.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said. “However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay for performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored.”

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson said.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures.

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care. “Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

MedPAC: Give Doctors a 2% Hike

Medicare should increase physician payments by 2.7% in 2006 to keep pace with the cost of providing care, the Medicare Payment Advisory Commission recommended. Such an increase will help physicians continue to treat Medicare patients, John C. Nelson, M.D., president of the American Medical Association, said in a statement. “Unless Medicare payments keep up with the cost of providing care, there is a real concern that some physicians will be forced to stop taking new Medicare patients,” he said. However, unless Congress fixes a flaw in Medicare's physician payment formula, doctors face a 5% cut next year and cumulative cuts of 30% thru 2012. Several MedPAC commissioners supported the idea of taking outpatient or Part B drugs from the formula, although the Government Accountability Office has warned that this solution would not prevent several years of declines in physician payments.

Fatigue and Driving Don't Mix

Tired residents on the road lead to more automobile accidents, according to a Web-based survey of 2,737 residents in their first postgraduate year (N. Engl. J. Med. 2005;352:125–34). Investigators found that in any month, each extended work shift increased the risk of any motor vehicle crash by 9% and increased the risk of a crash on the way home from work by more than 16%. Those who worked 5 or more extended shifts in a month were also more likely to fall asleep behind the wheel. “These results have implications for medical residency programs, which routinely schedule physicians to work more than 24 consecutive hours,” the researchers said. The respondents had completed more than 17,000 monthly reports that provided detailed information about work hours, work shifts of an extended duration, documented motor vehicle crashes, near-miss accidents, and incidents involving involuntary sleeping.

Compensation for Vaccine Injuries

The National Vaccine Injury Compensation Program (VICP) will now cover injuries related to the hepatitis A vaccine. Hepatitis A is the most common type of hepatitis reported in the United States, and causes an estimated 125,000 to 200,000 cases per year. The vaccine is recommended for children in certain states and high-incidence communities, in addition to people with chronic diseases or those traveling to countries where the disease is common. Most people who receive the hepatitis A vaccine don't experience serious problems. However, those who believe they've been injured by the vaccine must file a claim within 3 years of the first symptom of the vaccine injury or within 2 years of the vaccine-related death, but not more than 4 years after the start of the first symptom of the vaccine-related injury from which the death occurred. Administered by the Health Resources and Services Administration, the VICP program provides financial compensation to eligible individuals thought to be injured by vaccines.

Feds Flunk on Tobacco Regulation

Congress and the White House got failing grades on tobacco control policies in 2004, the American Lung Association said in its annual State of Tobacco Control report. The House of Representatives, for example, blocked legislation to grant the Food and Drug Administration authority to regulate tobacco products. Although President Bush signed an international treaty that sets standards to control tobacco use and addiction, he has not sent it to the Senate for ratification, the lung association said. In contrast, a number of state and local governments have stepped up efforts to enact strong tobacco control policies, such as approving laws to protect people from secondhand smoke and increase cigarette taxes, the report stated. Several states and communities, including Idaho; Rhode Island; Columbus, Ohio; and Lexington, Ky., achieved smoke-free workplaces.

Delay in Plan B Spawns Lawsuit

An advocacy group is suing the FDA for delaying its decision on over-the-counter status for the emergency contraceptive Plan B (levonorgestrel). “Half of the 3 million pregnancies in the U.S. are unintended each year. By denying women over-the-counter access to a safe and effective drug that would significantly reduce those numbers—including pregnancies that end in abortion—the FDA is acting unlawfully,” said Nancy Northrup, president of the Center for Reproductive Rights, which filed its suit in a New York district court. The FDA had been scheduled to issue a decision in late January on a second application for OTC status for Plan B by its manufacturer, Barr Pharmaceuticals. Steven Galson, M.D., acting director of the FDA's Center for Drug Evaluation and Research, had rejected Barr's initial request for over-the-counter marketing status last spring, citing a lack of sufficient evidence regarding the effects of OTC availability of emergency contraception in younger women. The FDA should be completing its review in the near future, Barr indicated in a statement. “The company remains optimistic that the agency will approve Plan B for OTC sale.”

Clinical Trial Participation

Most Americans say that clinical research studies are safe for participants, according to a new nationwide survey. However, 57% said they would have greater trust in clinical research information if the results were made available on a public Web site or registry. The survey of 1,000 adults was conducted last December by The Center for Information and Study on Clinical Research Participation and Opinion Dynamics Corporation. “The public clearly plays a vital role in clinical research,” said Richard Greif, project director for Opinion Dynamics.

MedPAC: Give Doctors a 2% Hike

Medicare should increase physician payments by 2.7% in 2006 to keep pace with the cost of providing care, the Medicare Payment Advisory Commission recommended. Such an increase will help physicians continue to treat Medicare patients, John C. Nelson, M.D., president of the American Medical Association, said in a statement. “Unless Medicare payments keep up with the cost of providing care, there is a real concern that some physicians will be forced to stop taking new Medicare patients,” he said. However, unless Congress fixes a flaw in Medicare's physician payment formula, doctors face a 5% cut next year and cumulative cuts of 30% thru 2012. Several MedPAC commissioners supported the idea of taking outpatient or Part B drugs from the formula, although the Government Accountability Office has warned that this solution would not prevent several years of declines in physician payments.

Fatigue and Driving Don't Mix

Tired residents on the road lead to more automobile accidents, according to a Web-based survey of 2,737 residents in their first postgraduate year (N. Engl. J. Med. 2005;352:125–34). Investigators found that in any month, each extended work shift increased the risk of any motor vehicle crash by 9% and increased the risk of a crash on the way home from work by more than 16%. Those who worked 5 or more extended shifts in a month were also more likely to fall asleep behind the wheel. “These results have implications for medical residency programs, which routinely schedule physicians to work more than 24 consecutive hours,” the researchers said. The respondents had completed more than 17,000 monthly reports that provided detailed information about work hours, work shifts of an extended duration, documented motor vehicle crashes, near-miss accidents, and incidents involving involuntary sleeping.

Compensation for Vaccine Injuries

The National Vaccine Injury Compensation Program (VICP) will now cover injuries related to the hepatitis A vaccine. Hepatitis A is the most common type of hepatitis reported in the United States, and causes an estimated 125,000 to 200,000 cases per year. The vaccine is recommended for children in certain states and high-incidence communities, in addition to people with chronic diseases or those traveling to countries where the disease is common. Most people who receive the hepatitis A vaccine don't experience serious problems. However, those who believe they've been injured by the vaccine must file a claim within 3 years of the first symptom of the vaccine injury or within 2 years of the vaccine-related death, but not more than 4 years after the start of the first symptom of the vaccine-related injury from which the death occurred. Administered by the Health Resources and Services Administration, the VICP program provides financial compensation to eligible individuals thought to be injured by vaccines.

Feds Flunk on Tobacco Regulation

Congress and the White House got failing grades on tobacco control policies in 2004, the American Lung Association said in its annual State of Tobacco Control report. The House of Representatives, for example, blocked legislation to grant the Food and Drug Administration authority to regulate tobacco products. Although President Bush signed an international treaty that sets standards to control tobacco use and addiction, he has not sent it to the Senate for ratification, the lung association said. In contrast, a number of state and local governments have stepped up efforts to enact strong tobacco control policies, such as approving laws to protect people from secondhand smoke and increase cigarette taxes, the report stated. Several states and communities, including Idaho; Rhode Island; Columbus, Ohio; and Lexington, Ky., achieved smoke-free workplaces.

Delay in Plan B Spawns Lawsuit

An advocacy group is suing the FDA for delaying its decision on over-the-counter status for the emergency contraceptive Plan B (levonorgestrel). “Half of the 3 million pregnancies in the U.S. are unintended each year. By denying women over-the-counter access to a safe and effective drug that would significantly reduce those numbers—including pregnancies that end in abortion—the FDA is acting unlawfully,” said Nancy Northrup, president of the Center for Reproductive Rights, which filed its suit in a New York district court. The FDA had been scheduled to issue a decision in late January on a second application for OTC status for Plan B by its manufacturer, Barr Pharmaceuticals. Steven Galson, M.D., acting director of the FDA's Center for Drug Evaluation and Research, had rejected Barr's initial request for over-the-counter marketing status last spring, citing a lack of sufficient evidence regarding the effects of OTC availability of emergency contraception in younger women. The FDA should be completing its review in the near future, Barr indicated in a statement. “The company remains optimistic that the agency will approve Plan B for OTC sale.”

Clinical Trial Participation

Most Americans say that clinical research studies are safe for participants, according to a new nationwide survey. However, 57% said they would have greater trust in clinical research information if the results were made available on a public Web site or registry. The survey of 1,000 adults was conducted last December by The Center for Information and Study on Clinical Research Participation and Opinion Dynamics Corporation. “The public clearly plays a vital role in clinical research,” said Richard Greif, project director for Opinion Dynamics.

MedPAC: Give Doctors a 2% Hike

Medicare should increase physician payments by 2.7% in 2006 to keep pace with the cost of providing care, the Medicare Payment Advisory Commission recommended. Such an increase will help physicians continue to treat Medicare patients, John C. Nelson, M.D., president of the American Medical Association, said in a statement. “Unless Medicare payments keep up with the cost of providing care, there is a real concern that some physicians will be forced to stop taking new Medicare patients,” he said. However, unless Congress fixes a flaw in Medicare's physician payment formula, doctors face a 5% cut next year and cumulative cuts of 30% thru 2012. Several MedPAC commissioners supported the idea of taking outpatient or Part B drugs from the formula, although the Government Accountability Office has warned that this solution would not prevent several years of declines in physician payments.

Fatigue and Driving Don't Mix

Tired residents on the road lead to more automobile accidents, according to a Web-based survey of 2,737 residents in their first postgraduate year (N. Engl. J. Med. 2005;352:125–34). Investigators found that in any month, each extended work shift increased the risk of any motor vehicle crash by 9% and increased the risk of a crash on the way home from work by more than 16%. Those who worked 5 or more extended shifts in a month were also more likely to fall asleep behind the wheel. “These results have implications for medical residency programs, which routinely schedule physicians to work more than 24 consecutive hours,” the researchers said. The respondents had completed more than 17,000 monthly reports that provided detailed information about work hours, work shifts of an extended duration, documented motor vehicle crashes, near-miss accidents, and incidents involving involuntary sleeping.

Compensation for Vaccine Injuries

The National Vaccine Injury Compensation Program (VICP) will now cover injuries related to the hepatitis A vaccine. Hepatitis A is the most common type of hepatitis reported in the United States, and causes an estimated 125,000 to 200,000 cases per year. The vaccine is recommended for children in certain states and high-incidence communities, in addition to people with chronic diseases or those traveling to countries where the disease is common. Most people who receive the hepatitis A vaccine don't experience serious problems. However, those who believe they've been injured by the vaccine must file a claim within 3 years of the first symptom of the vaccine injury or within 2 years of the vaccine-related death, but not more than 4 years after the start of the first symptom of the vaccine-related injury from which the death occurred. Administered by the Health Resources and Services Administration, the VICP program provides financial compensation to eligible individuals thought to be injured by vaccines.

Feds Flunk on Tobacco Regulation

Congress and the White House got failing grades on tobacco control policies in 2004, the American Lung Association said in its annual State of Tobacco Control report. The House of Representatives, for example, blocked legislation to grant the Food and Drug Administration authority to regulate tobacco products. Although President Bush signed an international treaty that sets standards to control tobacco use and addiction, he has not sent it to the Senate for ratification, the lung association said. In contrast, a number of state and local governments have stepped up efforts to enact strong tobacco control policies, such as approving laws to protect people from secondhand smoke and increase cigarette taxes, the report stated. Several states and communities, including Idaho; Rhode Island; Columbus, Ohio; and Lexington, Ky., achieved smoke-free workplaces.

Delay in Plan B Spawns Lawsuit

An advocacy group is suing the FDA for delaying its decision on over-the-counter status for the emergency contraceptive Plan B (levonorgestrel). “Half of the 3 million pregnancies in the U.S. are unintended each year. By denying women over-the-counter access to a safe and effective drug that would significantly reduce those numbers—including pregnancies that end in abortion—the FDA is acting unlawfully,” said Nancy Northrup, president of the Center for Reproductive Rights, which filed its suit in a New York district court. The FDA had been scheduled to issue a decision in late January on a second application for OTC status for Plan B by its manufacturer, Barr Pharmaceuticals. Steven Galson, M.D., acting director of the FDA's Center for Drug Evaluation and Research, had rejected Barr's initial request for over-the-counter marketing status last spring, citing a lack of sufficient evidence regarding the effects of OTC availability of emergency contraception in younger women. The FDA should be completing its review in the near future, Barr indicated in a statement. “The company remains optimistic that the agency will approve Plan B for OTC sale.”

Clinical Trial Participation

Most Americans say that clinical research studies are safe for participants, according to a new nationwide survey. However, 57% said they would have greater trust in clinical research information if the results were made available on a public Web site or registry. The survey of 1,000 adults was conducted last December by The Center for Information and Study on Clinical Research Participation and Opinion Dynamics Corporation. “The public clearly plays a vital role in clinical research,” said Richard Greif, project director for Opinion Dynamics.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year. But MedPAC later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and provide care for lower shares of Medicaid patients.

So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a January meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

To date, there's only a small sample of institutions to work on, and “we don't have a strong analytic foundation [on which] to base efficiency. With regard to quality, we haven't looked at that at all,” he said.

MedPAC should readdress the issue in the future, however, “so that we could craft rules to get us the best competition without compromising clinical judgment,” Mr. Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not. That effectively placed a moratorium on their construction.

The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium.

“This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict-of-interest concerns,” he said.

In other recommendations slated for MedPAC's March report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should amend the law to give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. In addition, case-mix measurement and outlier policies should be developed over a transitional period.

▸ HHS should also have the authority to regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

Gainsharing has the potential benefit of better aligning hospital and physician financial incentives, but could be structured to have fewer risks than outright physician ownership of hospitals, according to MedPAC analyst Ariel Winter.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year. But MedPAC later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and provide care for lower shares of Medicaid patients.

So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a January meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

To date, there's only a small sample of institutions to work on, and “we don't have a strong analytic foundation [on which] to base efficiency. With regard to quality, we haven't looked at that at all,” he said.

MedPAC should readdress the issue in the future, however, “so that we could craft rules to get us the best competition without compromising clinical judgment,” Mr. Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not. That effectively placed a moratorium on their construction.

The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium.

“This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict-of-interest concerns,” he said.

In other recommendations slated for MedPAC's March report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should amend the law to give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. In addition, case-mix measurement and outlier policies should be developed over a transitional period.

▸ HHS should also have the authority to regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

Gainsharing has the potential benefit of better aligning hospital and physician financial incentives, but could be structured to have fewer risks than outright physician ownership of hospitals, according to MedPAC analyst Ariel Winter.

WASHINGTON — Congress should extend the Medicare Modernization Act's moratorium on the construction of physician-owned specialty hospitals for another 18 months, a federal advisory panel has recommended.

The Medicare Payment Advisory Commission in draft recommendations had set the extension for 1 year. But MedPAC later changed it to 18 months after commission members decided that more time was needed to study the full impact of these hospitals, often deemed as “cream skimmers” for attracting more profitable patients away from community hospitals.

MedPAC data indicate that specialty hospitals tend to concentrate on certain diagnosis-related groups (DRGs), treating relatively lower-severity patients within them, and provide care for lower shares of Medicaid patients.

So far, they've had little financial impact on community hospitals, MedPAC analysts claim.

Commissioners at a January meeting decided to forgo tougher language that would have eliminated the “whole hospital” exemption, a provision in the self-referral regulations that allows physicians to refer patients to a hospital in which they have an investment interest as long as the interest is in the entire hospital.

Eliminating the exemption “is not the right step to take at this time due to the limited amount of data we have at this point on specialty hospitals and their performance,” MedPAC chairman Glenn Hackbarth said.

To date, there's only a small sample of institutions to work on, and “we don't have a strong analytic foundation [on which] to base efficiency. With regard to quality, we haven't looked at that at all,” he said.

MedPAC should readdress the issue in the future, however, “so that we could craft rules to get us the best competition without compromising clinical judgment,” Mr. Hackbarth said.

Existing specialty hospitals and hospitals under development were still eligible for the whole hospital exemption under the 2003 Medicare reform law, but new hospitals were not. That effectively placed a moratorium on their construction.

The original moratorium, set to expire in June, would effectively go on until Jan. 1, 2007, if MedPAC's recommendation were adopted.

In a statement, Rick Pollack, executive vice president of the American Hospital Association, commended MedPAC for extending the moratorium.

“This decision sends an important message to Congress that physician ownership and self-referral can cause serious conflict-of-interest concerns,” he said.

In other recommendations slated for MedPAC's March report to Congress, commissioners voted on several measures to refine the DRGs used to determine hospital payments to better account for differences in severity of illness among patients:

▸ The Department of Health and Human Services should base the DRG relative weights on the estimated cost of providing care rather than on charges, and on the national average of hospitals' relative values in each DRG.

▸ Congress should amend the law to give the Department of Health and Human Services secretary authority to adjust the DRG relative weights to account for differences in the prevalence of high-cost outlier cases. In addition, case-mix measurement and outlier policies should be developed over a transitional period.

▸ HHS should also have the authority to regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

Gainsharing has the potential benefit of better aligning hospital and physician financial incentives, but could be structured to have fewer risks than outright physician ownership of hospitals, according to MedPAC analyst Ariel Winter.

MedPAC: Give Doctors a 2% Hike

Medicare should increase physician payments by 2.7% in 2006 to keep pace with the cost of providing care, the Medicare Payment Advisory Commission recommended. Such an increase will help physicians continue to treat Medicare patients, John C. Nelson, M.D., president of the American Medical Association, said in a statement. “Unless Medicare payments keep up with the cost of providing care, there is a real concern that some physicians will be forced to stop taking new Medicare patients,” he said. However, unless Congress fixes a flaw in Medicare's physician payment formula, doctors face a 5% cut next year and cumulative cuts of 30% through 2012. Several MedPAC commissioners supported the idea of taking outpatient or Part B drugs from the formula, although the Government Accountability Office has warned that this solution would not prevent several years of declines in physician payments.

Fatigue and Driving Don't Mix

Tired residents on the road lead to more automobile accidents, according to a Web-based survey of 2,737 residents in their first postgraduate year (N. Engl. J. Med. 2005;352:125–134). Investigators found that in any month, each extended work shift increased the risk of any motor vehicle crash by 9% and increased the risk of a crash on the way home from work by more than 16%. Those who worked five or more extended shifts in a month were also more likely to fall asleep behind the wheel. “These results have implications for medical residency programs, which routinely schedule physicians to work more than 24 consecutive hours,” the researchers said. The respondents had completed more than 17,000 monthly reports that provided detailed information about work hours, work shifts of an extended duration, documented motor vehicle crashes, near-miss accidents, and incidents involving involuntary sleeping.

Compensation for Vaccine Injuries

The National Vaccine Injury Compensation Program (VICP) will now cover injuries related to the hepatitis A vaccine. Hepatitis A is the most common type of hepatitis reported in the United States, and causes an estimated 125,000 to 200,000 cases per year. The vaccine is recommended for children in certain states and high-incidence communities, in addition to people with chronic diseases or those traveling to countries where the disease is common. Most people who receive the hepatitis A vaccine don't experience serious problems. However, those who believe they've been injured by the vaccine must file a claim within 3 years of the first symptom of the vaccine injury or within 2 years of the vaccine-related death, but not more than 4 years after the start of the first symptom of the vaccine-related injury from which the death occurred. Administered by the Health Resources and Services Administration, the VICP program provides financial compensation to eligible individuals thought to be injured by vaccines.

Feds Flunk on Tobacco Regulation

Congress and the White House got failing grades on tobacco control policies in 2004, the American Lung Association said in its annual State of Tobacco Control report. The House of Representatives, for example, blocked legislation to grant the Food and Drug Administration authority to regulate tobacco products. Although President Bush signed an international treaty that sets standards to control tobacco use and addiction, he has not sent it to the Senate for ratification, the lung association said. In contrast, a number of state and local governments have stepped up efforts to enact strong tobacco control policies, such as approving laws to protect people from secondhand smoke and increase cigarette taxes, the report stated. Several states and communities, including Idaho; Rhode Island; Columbus, Ohio; and Lexington, Ky., achieved smoke-free workplaces.

Lawsuit Over Delay in Plan B

An advocacy group is suing the FDA for delaying its decision on over-the-counter status for the emergency contraceptive Plan B (levonorgestrel). “Half of the 3 million pregnancies in the U.S. are unintended each year. By denying women over-the-counter access to a safe and effective drug that would significantly reduce those numbers—including pregnancies that end in abortion—the FDA is acting unlawfully,” said Nancy Northrup, president of the Center for Reproductive Rights, which filed its suit in a New York district court. The FDA had been scheduled to issue a decision in late January on a second application for OTC status for Plan B by its manufacturer, Barr Pharmaceuticals. Steven Galson, M.D., acting director of the FDA's Center for Drug Evaluation and Research, had rejected Barr's initial request for over-the-counter marketing status last spring, citing insufficient evidence regarding the effects of OTC availability of emergency contraception in younger women. The FDA should be completing its review in the near future, Barr indicated in a statement. “The company remains optimistic that the agency will approve Plan B for OTC sale.”

Clinical Trial Participation

Most Americans say that clinical research studies are safe for participants, according to a new nationwide survey. But 57% said they would have greater trust in clinical research information if the results were made available on a public Web site or registry. The survey of 1,000 adults was conducted last December by the Center for Information and Study on Clinical Research Participation and Opinion Dynamics Corp. “The public clearly plays a vital role in clinical research,” said Richard Greif, project director for Opinion Dynamics.

MedPAC: Give Doctors a 2% Hike

Medicare should increase physician payments by 2.7% in 2006 to keep pace with the cost of providing care, the Medicare Payment Advisory Commission recommended. Such an increase will help physicians continue to treat Medicare patients, John C. Nelson, M.D., president of the American Medical Association, said in a statement. “Unless Medicare payments keep up with the cost of providing care, there is a real concern that some physicians will be forced to stop taking new Medicare patients,” he said. However, unless Congress fixes a flaw in Medicare's physician payment formula, doctors face a 5% cut next year and cumulative cuts of 30% through 2012. Several MedPAC commissioners supported the idea of taking outpatient or Part B drugs from the formula, although the Government Accountability Office has warned that this solution would not prevent several years of declines in physician payments.

Fatigue and Driving Don't Mix

Tired residents on the road lead to more automobile accidents, according to a Web-based survey of 2,737 residents in their first postgraduate year (N. Engl. J. Med. 2005;352:125–134). Investigators found that in any month, each extended work shift increased the risk of any motor vehicle crash by 9% and increased the risk of a crash on the way home from work by more than 16%. Those who worked five or more extended shifts in a month were also more likely to fall asleep behind the wheel. “These results have implications for medical residency programs, which routinely schedule physicians to work more than 24 consecutive hours,” the researchers said. The respondents had completed more than 17,000 monthly reports that provided detailed information about work hours, work shifts of an extended duration, documented motor vehicle crashes, near-miss accidents, and incidents involving involuntary sleeping.

Compensation for Vaccine Injuries

The National Vaccine Injury Compensation Program (VICP) will now cover injuries related to the hepatitis A vaccine. Hepatitis A is the most common type of hepatitis reported in the United States, and causes an estimated 125,000 to 200,000 cases per year. The vaccine is recommended for children in certain states and high-incidence communities, in addition to people with chronic diseases or those traveling to countries where the disease is common. Most people who receive the hepatitis A vaccine don't experience serious problems. However, those who believe they've been injured by the vaccine must file a claim within 3 years of the first symptom of the vaccine injury or within 2 years of the vaccine-related death, but not more than 4 years after the start of the first symptom of the vaccine-related injury from which the death occurred. Administered by the Health Resources and Services Administration, the VICP program provides financial compensation to eligible individuals thought to be injured by vaccines.

Feds Flunk on Tobacco Regulation

Congress and the White House got failing grades on tobacco control policies in 2004, the American Lung Association said in its annual State of Tobacco Control report. The House of Representatives, for example, blocked legislation to grant the Food and Drug Administration authority to regulate tobacco products. Although President Bush signed an international treaty that sets standards to control tobacco use and addiction, he has not sent it to the Senate for ratification, the lung association said. In contrast, a number of state and local governments have stepped up efforts to enact strong tobacco control policies, such as approving laws to protect people from secondhand smoke and increase cigarette taxes, the report stated. Several states and communities, including Idaho; Rhode Island; Columbus, Ohio; and Lexington, Ky., achieved smoke-free workplaces.

Lawsuit Over Delay in Plan B

An advocacy group is suing the FDA for delaying its decision on over-the-counter status for the emergency contraceptive Plan B (levonorgestrel). “Half of the 3 million pregnancies in the U.S. are unintended each year. By denying women over-the-counter access to a safe and effective drug that would significantly reduce those numbers—including pregnancies that end in abortion—the FDA is acting unlawfully,” said Nancy Northrup, president of the Center for Reproductive Rights, which filed its suit in a New York district court. The FDA had been scheduled to issue a decision in late January on a second application for OTC status for Plan B by its manufacturer, Barr Pharmaceuticals. Steven Galson, M.D., acting director of the FDA's Center for Drug Evaluation and Research, had rejected Barr's initial request for over-the-counter marketing status last spring, citing insufficient evidence regarding the effects of OTC availability of emergency contraception in younger women. The FDA should be completing its review in the near future, Barr indicated in a statement. “The company remains optimistic that the agency will approve Plan B for OTC sale.”

Clinical Trial Participation

Most Americans say that clinical research studies are safe for participants, according to a new nationwide survey. But 57% said they would have greater trust in clinical research information if the results were made available on a public Web site or registry. The survey of 1,000 adults was conducted last December by the Center for Information and Study on Clinical Research Participation and Opinion Dynamics Corp. “The public clearly plays a vital role in clinical research,” said Richard Greif, project director for Opinion Dynamics.

MedPAC: Give Doctors a 2% Hike

Medicare should increase physician payments by 2.7% in 2006 to keep pace with the cost of providing care, the Medicare Payment Advisory Commission recommended. Such an increase will help physicians continue to treat Medicare patients, John C. Nelson, M.D., president of the American Medical Association, said in a statement. “Unless Medicare payments keep up with the cost of providing care, there is a real concern that some physicians will be forced to stop taking new Medicare patients,” he said. However, unless Congress fixes a flaw in Medicare's physician payment formula, doctors face a 5% cut next year and cumulative cuts of 30% through 2012. Several MedPAC commissioners supported the idea of taking outpatient or Part B drugs from the formula, although the Government Accountability Office has warned that this solution would not prevent several years of declines in physician payments.

Fatigue and Driving Don't Mix

Tired residents on the road lead to more automobile accidents, according to a Web-based survey of 2,737 residents in their first postgraduate year (N. Engl. J. Med. 2005;352:125–134). Investigators found that in any month, each extended work shift increased the risk of any motor vehicle crash by 9% and increased the risk of a crash on the way home from work by more than 16%. Those who worked five or more extended shifts in a month were also more likely to fall asleep behind the wheel. “These results have implications for medical residency programs, which routinely schedule physicians to work more than 24 consecutive hours,” the researchers said. The respondents had completed more than 17,000 monthly reports that provided detailed information about work hours, work shifts of an extended duration, documented motor vehicle crashes, near-miss accidents, and incidents involving involuntary sleeping.

Compensation for Vaccine Injuries

The National Vaccine Injury Compensation Program (VICP) will now cover injuries related to the hepatitis A vaccine. Hepatitis A is the most common type of hepatitis reported in the United States, and causes an estimated 125,000 to 200,000 cases per year. The vaccine is recommended for children in certain states and high-incidence communities, in addition to people with chronic diseases or those traveling to countries where the disease is common. Most people who receive the hepatitis A vaccine don't experience serious problems. However, those who believe they've been injured by the vaccine must file a claim within 3 years of the first symptom of the vaccine injury or within 2 years of the vaccine-related death, but not more than 4 years after the start of the first symptom of the vaccine-related injury from which the death occurred. Administered by the Health Resources and Services Administration, the VICP program provides financial compensation to eligible individuals thought to be injured by vaccines.

Feds Flunk on Tobacco Regulation

Congress and the White House got failing grades on tobacco control policies in 2004, the American Lung Association said in its annual State of Tobacco Control report. The House of Representatives, for example, blocked legislation to grant the Food and Drug Administration authority to regulate tobacco products. Although President Bush signed an international treaty that sets standards to control tobacco use and addiction, he has not sent it to the Senate for ratification, the lung association said. In contrast, a number of state and local governments have stepped up efforts to enact strong tobacco control policies, such as approving laws to protect people from secondhand smoke and increase cigarette taxes, the report stated. Several states and communities, including Idaho; Rhode Island; Columbus, Ohio; and Lexington, Ky., achieved smoke-free workplaces.

Lawsuit Over Delay in Plan B

An advocacy group is suing the FDA for delaying its decision on over-the-counter status for the emergency contraceptive Plan B (levonorgestrel). “Half of the 3 million pregnancies in the U.S. are unintended each year. By denying women over-the-counter access to a safe and effective drug that would significantly reduce those numbers—including pregnancies that end in abortion—the FDA is acting unlawfully,” said Nancy Northrup, president of the Center for Reproductive Rights, which filed its suit in a New York district court. The FDA had been scheduled to issue a decision in late January on a second application for OTC status for Plan B by its manufacturer, Barr Pharmaceuticals. Steven Galson, M.D., acting director of the FDA's Center for Drug Evaluation and Research, had rejected Barr's initial request for over-the-counter marketing status last spring, citing insufficient evidence regarding the effects of OTC availability of emergency contraception in younger women. The FDA should be completing its review in the near future, Barr indicated in a statement. “The company remains optimistic that the agency will approve Plan B for OTC sale.”

Clinical Trial Participation

Most Americans say that clinical research studies are safe for participants, according to a new nationwide survey. But 57% said they would have greater trust in clinical research information if the results were made available on a public Web site or registry. The survey of 1,000 adults was conducted last December by the Center for Information and Study on Clinical Research Participation and Opinion Dynamics Corp. “The public clearly plays a vital role in clinical research,” said Richard Greif, project director for Opinion Dynamics.

WASHINGTON — Physicians should be reimbursed retroactively for any payment miscalculations that occurred under Medicare's new system for in-office infusions, the Practicing Physicians Advisory Council recommended.

The average sales price (ASP) is something federal regulators “are concocting, and they don't know how accurate it's going to be,” said PPAC member Barbara L. McAneny, M.D., an oncologist from Albuquerque, N.M., who drew up the recommendation.

For that reason, the Centers for Medicare and Medicaid Services should establish a correction factor for each quarter it updates pricing on the ASP, to prevent physicians from treating patients at a loss or being put in the position of denying them medical treatment, she said. PPAC is an independent panel that advises CMS on issues related to physician payment.

The ASP was authorized by the Medicare Modernization Act of 2003, replacing the former system of overpayments for drugs and underpayments for their administration. The intent was to make fair payments for both services.

This year and next, Medicare will pay physicians the ASP plus 6%, although in 2006, physicians will have the option of obtaining the drugs directly from a supplier selected by Medicare through a competitive bidding process.

CMS officials told the panel that the agency would update pricing for the ASP on a quarterly basis. However, Dr. McAneny argued that this would not allow for any mistakes in pricing made along the way.

“Suppose the ASP is set at $60 for a drug, but you can only purchase that drug for $100,” she later said in an interview. This means physicians would be getting paid only $60 for that drug from January through April—and losing $40 every time they administer the drug.

CMS might be able to correct the price on April 1, but that doesn't compensate for the losses physicians would have incurred over the first quarter of the year, Dr. McAneny said.

As a result, the agency could end up getting complaints from half the physicians in the country about the cost of a drug.

By putting in a correction mechanism, the agency can make the change retroactive, she recommended.

A report from the Government Accountability Office indicated that physicians may not get shortchanged under the ASP. Medicare payments for cancer drugs may decline next year, but payments are actually expected to exceed physicians' costs by 6% on average, the GAO found. The American Society of Clinical Oncology responded that the study underreported some costs and the report's methodology was flawed.

“GAO has always said that everything's going to be fine” with the ASP, Dr. McAneny said. Nevertheless, “we need a plan B in case they're wrong.”

The ASP replaces the average wholesale price, a number that drug makers had been giving to the government for each drug administered. Medicare in the past paid physicians 95% of the average wholesale price for in-office administration of a drug to a Medicare beneficiary; however, the physician was not paid an administration fee.

The ASP system comes with mixed benefits: Physicians now will get paid an administration fee but they won't be getting paid as much for the drugs themselves as they were under the average-wholesale- price system.

PPAC also requested that physicians be allowed Internet access to a list of drugs that CMS compiled by manufacturer to determine ASP.

“This will be very helpful to the physician community—not just oncology—but for everybody who wants to purchase drugs…under the average selling price, and [to] know who they can purchase these drugs from,” Dr. McAneny said.

WASHINGTON — Physicians should be reimbursed retroactively for any payment miscalculations that occurred under Medicare's new system for in-office infusions, the Practicing Physicians Advisory Council recommended.

The average sales price (ASP) is something federal regulators “are concocting, and they don't know how accurate it's going to be,” said PPAC member Barbara L. McAneny, M.D., an oncologist from Albuquerque, N.M., who drew up the recommendation.

For that reason, the Centers for Medicare and Medicaid Services should establish a correction factor for each quarter it updates pricing on the ASP, to prevent physicians from treating patients at a loss or being put in the position of denying them medical treatment, she said. PPAC is an independent panel that advises CMS on issues related to physician payment.

The ASP was authorized by the Medicare Modernization Act of 2003, replacing the former system of overpayments for drugs and underpayments for their administration. The intent was to make fair payments for both services.

This year and next, Medicare will pay physicians the ASP plus 6%, although in 2006, physicians will have the option of obtaining the drugs directly from a supplier selected by Medicare through a competitive bidding process.

CMS officials told the panel that the agency would update pricing for the ASP on a quarterly basis. However, Dr. McAneny argued that this would not allow for any mistakes in pricing made along the way.

“Suppose the ASP is set at $60 for a drug, but you can only purchase that drug for $100,” she later said in an interview. This means physicians would be getting paid only $60 for that drug from January through April—and losing $40 every time they administer the drug.

CMS might be able to correct the price on April 1, but that doesn't compensate for the losses physicians would have incurred over the first quarter of the year, Dr. McAneny said.

As a result, the agency could end up getting complaints from half the physicians in the country about the cost of a drug.

By putting in a correction mechanism, the agency can make the change retroactive, she recommended.

A report from the Government Accountability Office indicated that physicians may not get shortchanged under the ASP. Medicare payments for cancer drugs may decline next year, but payments are actually expected to exceed physicians' costs by 6% on average, the GAO found. The American Society of Clinical Oncology responded that the study underreported some costs and the report's methodology was flawed.

“GAO has always said that everything's going to be fine” with the ASP, Dr. McAneny said. Nevertheless, “we need a plan B in case they're wrong.”

The ASP replaces the average wholesale price, a number that drug makers had been giving to the government for each drug administered. Medicare in the past paid physicians 95% of the average wholesale price for in-office administration of a drug to a Medicare beneficiary; however, the physician was not paid an administration fee.

The ASP system comes with mixed benefits: Physicians now will get paid an administration fee but they won't be getting paid as much for the drugs themselves as they were under the average-wholesale- price system.

PPAC also requested that physicians be allowed Internet access to a list of drugs that CMS compiled by manufacturer to determine ASP.

“This will be very helpful to the physician community—not just oncology—but for everybody who wants to purchase drugs…under the average selling price, and [to] know who they can purchase these drugs from,” Dr. McAneny said.

WASHINGTON — Physicians should be reimbursed retroactively for any payment miscalculations that occurred under Medicare's new system for in-office infusions, the Practicing Physicians Advisory Council recommended.

The average sales price (ASP) is something federal regulators “are concocting, and they don't know how accurate it's going to be,” said PPAC member Barbara L. McAneny, M.D., an oncologist from Albuquerque, N.M., who drew up the recommendation.

For that reason, the Centers for Medicare and Medicaid Services should establish a correction factor for each quarter it updates pricing on the ASP, to prevent physicians from treating patients at a loss or being put in the position of denying them medical treatment, she said. PPAC is an independent panel that advises CMS on issues related to physician payment.

The ASP was authorized by the Medicare Modernization Act of 2003, replacing the former system of overpayments for drugs and underpayments for their administration. The intent was to make fair payments for both services.

This year and next, Medicare will pay physicians the ASP plus 6%, although in 2006, physicians will have the option of obtaining the drugs directly from a supplier selected by Medicare through a competitive bidding process.

CMS officials told the panel that the agency would update pricing for the ASP on a quarterly basis. However, Dr. McAneny argued that this would not allow for any mistakes in pricing made along the way.

“Suppose the ASP is set at $60 for a drug, but you can only purchase that drug for $100,” she later said in an interview. This means physicians would be getting paid only $60 for that drug from January through April—and losing $40 every time they administer the drug.

CMS might be able to correct the price on April 1, but that doesn't compensate for the losses physicians would have incurred over the first quarter of the year, Dr. McAneny said.

As a result, the agency could end up getting complaints from half the physicians in the country about the cost of a drug.

By putting in a correction mechanism, the agency can make the change retroactive, she recommended.

A report from the Government Accountability Office indicated that physicians may not get shortchanged under the ASP. Medicare payments for cancer drugs may decline next year, but payments are actually expected to exceed physicians' costs by 6% on average, the GAO found. The American Society of Clinical Oncology responded that the study underreported some costs and the report's methodology was flawed.

“GAO has always said that everything's going to be fine” with the ASP, Dr. McAneny said. Nevertheless, “we need a plan B in case they're wrong.”

The ASP replaces the average wholesale price, a number that drug makers had been giving to the government for each drug administered. Medicare in the past paid physicians 95% of the average wholesale price for in-office administration of a drug to a Medicare beneficiary; however, the physician was not paid an administration fee.

The ASP system comes with mixed benefits: Physicians now will get paid an administration fee but they won't be getting paid as much for the drugs themselves as they were under the average-wholesale- price system.

PPAC also requested that physicians be allowed Internet access to a list of drugs that CMS compiled by manufacturer to determine ASP.

“This will be very helpful to the physician community—not just oncology—but for everybody who wants to purchase drugs…under the average selling price, and [to] know who they can purchase these drugs from,” Dr. McAneny said.