Providers Upset House Used Previous SGR Offsets For Non-Medicare Bill

Published by Inside Health Policy
John Wilkerson
December 5, 2014

Health care providers are angry the House cut pay for Medicare services by nearly $1.2 billion to offset legislation that is unrelated to Medicare and are urging the Senate to reject the offsets, two of which had previously been used to defray the cost of Medicare physician payment fixes. The offsets include speeding efforts to identify billing codes that overpay doctors, delaying the inclusion of oral drugs in the dialysis-reimbursement bundle and ending coverage of an erectile-dysfunction medical device.

The Medicare offsets are part of legislation passed by the House Wednesday (Dec. 3) that would create tax-free savings accounts for individuals with disabilities, while protecting their access to Medicaid. The Congressional Budget Office estimates the Achieving a Better Life Experience (ABLE) Act would cost $2 billion over 10 years.

Providers support the legislation’s goals but disagree with how the bill is paid for. Two of the three Medicare offsets either speed or extend policies that were used to pay for delaying Medicare pay cuts to physicians this past March.

“While the American Medical Association agrees with the intention of the ABLE act to help people with disabilities pay for education, housing and other needs, we object to Congress’ decision to pay for the tax policy change by further cutting Medicare payments to physicians who are already facing a potential tsunami of cuts from the Sustainable Growth Rate and penalties from the Meaningful Use, Physician Quality Reporting System (PQRS) and Value-based Modifier Program,” the AMA states.

AMA opposes the measure on misvalued codes. CMS has been reviewing billing codes for several years to find services that are overpaid. In March, when Congress last overrode major physician-pay cuts, it included a misvalued codes measure. The law requires CMS to identify overvalued bill codes for a savings of 0.5 percent each year between 2017 and 2020. The ABLE Act would advance and compress that window to 2016 to 2018, and it would increase the savings target in 2016 to 1 percent.

Savings that CMS identifies are redistributed to other billing codes, and primary care doctors typically benefit from those redistributions. However, if CMS misses those targets, it must cut pay across the board to physicians. That’s an important point, physician lobbyists said, because CMS can’t meet the schedule in the ABLE Act, so both specialists and primary doctors are hurt.

The Association of American Family Physicians agrees.

“The AAFP supports the review of physician payment codes that are judged to be misvalued and using the excess funds to support the appropriate Medicare payments,” a Dec. 3 letter to lawmakers states. “The AAFP also supports the intention of the ABLE Act to help disabled adults cover the cost of their health care over their lifetime. However, the AAFP is concerned about using permanent reductions in Medicare to pay for non-Medicare programs.”

Physician lobbyists’ assertions that CMS doesn’t have the time or resources to identified misvalued codes are not made up. CMS said as much in the 2015 physician-pay rule. The agency will not review misidentified codes next year because it is too busy working on a related effort involving global surgical payments, which are bundles of billing codes.

“[G]iven the resources required over the next several years to revalue the services with global periods, we believe it is best to concentrate our efforts on these valuations. Therefore, we are not finalizing the codes identified through the high expenditure screen as potentially misvalued at this time. Also, we are not responding to comments at this time regarding whether particular codes should or should not be included in the high expenditure code screen and identified as potentially misvalued codes,” the final rule states, without saying when CMS plans to get back to identifying misvalued codes.

Dialysis facilities and kidney patients also oppose the offsets, although like AMA and AAFP, they support the policy.
Intuitively, including drugs in a bundle of services should drive down the cost of using those drugs, industry analysts say, because facilities would use those drugs more judiciously to keep spending down and profits up. However, several years ago, the Congressional Budget Office decided that the measure saves money because it believes CMS would not sufficiently account for how much generics will lower the cost of medications. Therefor, CBO projected that CMS would price the dialysis bundle at a level greater than what Medicare would spend if the drugs were to remain out of the bundle. CBO continues to rely on that assessment.

Industry analysts say the offset demonstrates that Congress will never let oral drugs be included in the bundle, because at this point the repeated delays have become absurd. When Democrats created the Medicare end-stage renal disease pay bundle in 2008, oral drugs were to be included in the bundle starting in 2012. CMS delayed their inclusion for two years, then the American Taxpayer Relief Act of 2012 (often called the “fiscal cliff deal”) further delayed including oral drugs in the ESRD bundle to 2016, and it used the savings to help pay for the SGR patch in that bill.

When the SGR was patched earlier this year in the Protecting Access to Medicare Act, Congress helped pay for it by extending the delay from 2016 to 2024. The provision in the House’s ABLE Act would extend the delay by one year, to 2025.

The Kidney Care Council, which represents dialysis companies, opposes the delay, as does the Dialysis Patient Citizens group.

“While Congress has captured funds associated with such oral drug delays in 2012 and again in 2014, it did so to mitigate dramatic cuts to an already fragile Medicare ESRD PPS which forces dialysis facilities to operate with some of the smallest margins of all Medicare providers (3-4 percent, on average, before the sequester, according to the independent Medicare Payment Advisory Commission),” the Kidney Care Council states in a Dec. 3 letter to Senate leaders in both parties, whom industry is lobbying to strip the offset.

The third offset provision — ending Medicare coverage of vacuum erection systems by treating them as a drug — has attracted less attention because it only hurts businesses that aren’t publicly traded and have little political clout, an analyst said. Congress’ decision to drastically cut pay for Gamma Knife in the 2012 fiscal cliff deal attracted a lot of negative attention, but that product’s maker is a publicly traded company. Medicare doesn’t cover erectile dysfunction drugs so the ABLE Act treats vacuum erection systems as drugs, even though they’re devices. A House aide said the offset had not previously been filed as an amendment or as legislation and it’s inclusion in the ABLE Act was the first time it came up.

See the original article here.