AAFP Letter to Congress

On behalf of the 94,300 members of the American Academy of Family Physicians, thank you for your efforts to provide a prescription drug benefit to our nations seniors in the Medicare program. Since it was created in 1965, the Medicare program has not kept pace with important changes in health care, principally the greater reliance on therapeutic drugs for patients outside of the hospital. While the Academy believes the bills passed by the House (H.R. 1) and the Senate (S. 1) have made useful strides toward bringing healthcare up to date for American seniors, both fall short of the ultimate goal of offering Medicare beneficiaries the help they need to receive their needed drugs. We will continue to work with Congress to develop legislative proposals that would give seniors the access to the drugs that will keep them healthy.

The bills contain numerous provisions not directly related to the pharmaceutical benefit, and the Academy would like to provide you with our views on many of these provisions.

The House bill includes a requirement (Sec. 601) that Medicare payments to physicians be increased at least 1.5 percent in 2004 and 1.5 percent in 2005. The Sustainable Growth Rate (SGR) would be calculated using a rolling ten-year average. Congress will have these two years to revise or replace the current formula. However, if Congress does not act, then the original formula would be reinstated and precipitous declines in payments would result. The Senate bill contains three different resolutions (Sections 464, 622 and 629) that express the sense of the Senate that the payment formula is flawed and beneficiary access to care may be compromised unless Congress replaces the formula. AAFP strongly urges adoption of the House provision with respect to physician reimbursement.

The Medicare Physician Fee Schedule conversion factor was cut by 5.4 percent in 2002. This was the largest physician payment cut in the history of the Medicare program and would have been followed by a 4.2 percent cut in 2003 if Congress had not acted to prevent it. AAFP members are greatly appreciative of the legislation that resulted in a modest 1.6 percent increase in Medicare physician reimbursements. However, physicians are now facing cuts in the range of 4 percent for each of the next several years. If the CMS projections become reality, the Medicare payment rates in 2005 will be lower than they were in
1991.

The cut in 2002 was the fourth time in 11 years that Medicare physician payment rates were reduced. During that time, physicians have been inundated with expensive new requirements to comply with numerous federal regulations. Overall, during the same 11 years, Medicare payments have risen by an annual average of just 1.1 percent, or 13 percent less than the governments own estimate of practice cost inflation.

This volatility, insufficiency and unpredictability of Medicare reimbursements translate to a lack of confidence on the part of physicians in the Medicare program. This no-confidence analysis ultimately translates to access problems for Medicare beneficiaries. Thus, it is critical that this flawed formula be replaced or at least substantially revised. AAFP urges the conference committee to adopt the House bill provision (Sec. 601). We are committed to working diligently with Congress over the next two years to fix this flawed formula used to determine Medicare payments to physicians.

The Senate has included a provision (Sec. 620) that would establish the Citizens Health Care Working Group to provide for a national public debate about how to reform the health care system so that it would offer every American the ability to obtain quality, affordable health care coverage. This working group, which would be broadly representative, would hold hearings across the country to examine the current health care system and to initiate a national dialogue on how to improve it. The Academy strongly agrees that this dialogue is needed and long overdue and we commend the Senate for proposing a realistic mechanism for producing this national discussion. We urge the Conference Committee to include this measure in the final bill.

S. 1 contains a provision (Sec. 421) that would change the geographic practice cost indices (GPCIs) used to arrive at reimbursement rates that are lower for rural physicians than they are for their non-rural counterparts. The revisions would move the geographic adjuster for physician work to a minimum of .980 in 2004, and all three GPCIs (i.e., physician work, practice expense and professional liability) to a minimum for 1.0 in 2005-2007.

The Senate bill also includes a provision (Sec. 422) that would make automatic the 10-percent Medicare Incentive Payment to physicians who provide services to Medicare beneficiaries in rural underserved areas. The House bill (Sec. 417) would retain the current MIP program, but would create an additional incentive program. This payment of 5 percent for primary care physicians in scarcity areas would be directed to those rural counties that have the fewest physicians compared to the number of Medicare beneficiaries. Physicians practicing in the lowest 20 percent of these counties would receive this additional bonus.

The Academy opposes any adjustments to the Medicare physician fee schedule, unless such adjustments are designed to achieve a specific public policy goal (such as encouraging physicians to practice in underserved areas). The provisions in the Senate bill clearly meet this criterion, and the Academy urges the conference committee to include them in the final bill. The AAFP supports the House version since it is similarly helpful if the new scarcity area is added to (rather than is substituted for) the Senate MIP program provisions.

The Academy urges conferees to accept Sections 411 and 418 of S. 1. In brief, these two sections clarify three issues regarding graduate medical education that are of concern to family medicine: 1) Section 411 allows physicians to continue to volunteer their time as teachers of residents; 2) it also clarifies current law so that hospitals sponsoring residency programs can continue to receive direct GME reimbursement and 3) Section 418 increases the IME payment to hospitals.

Regarding volunteer teaching time, the Centers for Medicare and Medicaid Services (CMS) has retroactively denied volunteer teaching time in ambulatory settings in hospital audits. In addition to these retroactive denials, CMS published a proposed rule May 19 that would require hospitals to provide compensation for teaching in non-hospital settings. Both the denials and the language in this section of the proposed rule contradict past regulatory policy. More importantly, they severely affect family medicine residency programs: not only have these programs been acting in accordance with earlier CMS provisions, but family medicine programs typically do not reimburse their doctors for teaching duties. Specifically, at least 55 hospital programs that CMS has audited were denied volunteer teaching time in ambulatory settings and were required to make repayments to the agency translating to millions of dollars. The language in Section 411 would clarify that physicians may continue to volunteer their teaching time.

Another problem in the proposed rule is the new application of Medicare principles regarding redistribution of costs and community support to direct GME reimbursement. The practical effect is to prohibit direct GME reimbursement to settings that have received non-Medicare funds at some point since the inception of the program. The principles of community support and redistribution have not been applied in the last 16 years, so the proposed rule breaks new ground in its sudden denial of direct GME reimbursement. As a result, family medicine training programs that have received outside funds (e.g., state dollars) at anytime in the past would be prohibited from receiving direct GME reimbursement. Section 411 clarifies current law so that programs may continue to receive these outside funds and remain eligible for GME payments.

Finally, Section 418 would slightly increase the indirect medical education adjustment for teaching hospitals. Right now, this section would increase the rate from 5.5 percent to 5.53 percent for 10 years beginning in FY 2004. One of the major purposes of the IME adjustment is to compensate teaching hospitals for the additional costs of training physicians. Unfortunately, the Balanced Budget Act of 1997 cut the IME adjustment from 6.5 percent to 5.5 percent, resulting in a loss of revenues for these crucial institutions. While we are pleased that a slight increase to this adjustment was included in the bill, we urge you to increase this rate to 6.5 percent in conference.

The Academy is concerned with the provision (Sec. 942) in H.R. 1 that mandates the use of International Classification of Disease-10th edition (ICD-10) in all medical settings. This instrument was specifically designed for inpatient settings and does not reflect the taxonomy utilized by physician clinicians, researchers or office administrators. The anticipated direct and indirect transition costs of a switch to ICD-10 are quite high. Physician offices would need to purchase new practice management software, not currently in existence, to accommodate the significantly different code set.

The AAFP has long supported the Current Procedural Terminology (CPT), which is an instrument that accurately describes the procedures administered to patients in an outpatient ambulatory setting. We believe that switching to ICD-10 would require that all resource-based relative value scale (RBRVS) relative value units would need to be revised, because they are based on CPT codes. The RBRVS system is essential to physician reimbursement. It is troubling that switching to ICD-10 could delay the appropriate and timely reimbursement of rendered health care services. A mandatory, industry-wide change to ICD-10 would be highly disruptive, burdensome and costly. Such a requirement would impose a massive new regulatory burden on physicians offices that is grossly inconsistent with regulatory relief and the Academy asks that it be deleted in conference.

The AAFP opposes Sec. 440 in S. 1, which would create a three-year demonstration project allowing Medicare beneficiary self-referral to chiropractors for a range of services to be decided by the Secretary of Health and Human Services. Chiropractic services are defined to include at least care for neuromusculoskeletal conditions, a term that has no commonly accepted medical meaning. The Academy is concerned that there is no clinical evidence that chiropractors are trained or qualified to serve as the point of contact for undiagnosed symptoms or conditions. The Institute of Medicine has defined primary care physicians (i.e., general internists, family physicians, and general pediatricians) as the appropriate medical home for patients with undifferentiated symptoms.

The Academy is strongly opposed to any expansion of the current Medicare chiropractic benefit. A large body of peer-reviewed medical literature exists stating chiropractic care is marginally useful for acute low back pain. The current Medicare benefit appropriately reflects the limited medical effectiveness of this procedure. It is also worth noting that there is no requirement that the demonstration project assess patient outcomes for quality or whether treatment conforms to existing medical clinical guidelines. The Academy requests that this provision be struck during conference.

The Academy is opposed to language in Sec. 407 in S. 1 and Sec. 409 in H.R. 1 that would allow nurse practitioners to serve as attending physicians for hospice patients. The Academy understands that some nurse practitioners in rural areas have a disincentive to refer to hospice, since hospice medical directors would serve as the attending physician where none exists. However, the Academy is opposed to defining nurse practitioners as physicians for purposes of ensuring reimbursement when they lack the training, clinical decision-making experience and expertise to serve as physicians. AAFP policy states that nurse practitioners should only function in a collaborative practice arrangement under the direction and responsible supervision of a practicing, licensed physician. A nurse practitioner should not be asked to provide those services that a physician is more appropriately trained to provide at the end of life. The Academy requests that these provisions be deleted in conference.

The AAFP is opposed to Sec. 449 in S. 1 that would allow a three-year demonstration project of Medicare beneficiary self-referral to a physical therapist without benefit of a medical consultation with a physician. Physical therapists are health care professionals trained to treat, not diagnose, a patient’s condition. As part of the treatment process, physical therapists use clinical decision-making based on their limited training. Physicians are the only healthcare professionals trained to initially diagnose a medical condition and determine how it should be treated. Since physical therapists are very well trained to treat specific conditions, they may be inclined to misinterpret patients undiagnosed symptoms as being caused by one of those limited conditions. The Academy cannot support any change in Medicare policy that would produce such consequences. The Academy is also concerned about an unchecked increase in Medicare expenditures that could occur from such a change in policy. The Academy requests that this language be deleted during conference.

The Academy is troubled by a provision contained in Sec. 101 of H.R. 1 requiring electronic prescribing of medications by 2006. Currently, there is interest throughout the health care industry in developing an electronic health record (EHR) that is affordable, readily configured and that could share data across a variety of health care settings. Electronic prescribing is a logical function within such larger EHR efforts. However, an unrealistic Congressional mandate of 2006 for one function (electronic prescribing) will drain urgently needed industry resources from the larger EHR effort. The Academy is concerned that physicians who are forced to test, buy and implement software to meet an arbitrary Congressional deadline, will be left without money or interest to invest in a larger EHR technology platform.

Finally, such a timetable is wholly unrealistic for family physicians most of whom practice in groups of three or less. AAFP is concerned that a new mandate with a deadline for compliance of 2006 could create an unrealistic technological and financial requirement for these small businesses.

The Academy asks that the conference committee instead accept the Senate language (Sec. 121) regarding electronic prescribing. The Senate bill would require HHS to develop and adopt standards for transactions and data elements to enable the electronic transmission of medical information, including prescriptions. The Academy feels that this is an appropriate governmental function that will allow the rapid and orderly development of more comprehensive electronic medical records that would be timely, organized and beneficial.

The Academy appreciates the regulatory relief and process appeal reforms contained in both S. 1 and H.R. 1. According to the Academy’s practice surveys of members, approximately 90 percent of practicing family physicians are enrolled in the Medicare program and are providing health care services to beneficiaries, making family physicians an essential source of health care for our nations elderly and disabled citizens. Therefore, compliance with Medicare regulations and carrier requirements are a significant feature of many family physicians daily practice.

The Academy requests that conferees adopt the following provisions in H.R. 1 relating to physician regulatory relief:

The Academy appreciates the inclusion of language, which AAFP originally proposed, that requires CMS to consult with physician groups before changing Medicare enrollment forms [Sec. 936(a) in H.R. 1/Sec. 515(a) in S. 1]. However, this consultation requirement does not take effect under both bills until after CMS develops an initial enrollment process required in the same section.

Both H.R. 1 and S. 1, as currently written, would implicitly sanction a proposed regulation recently published by CMS that would require an extensive new physician enrollment process. In comments offered separately to CMS, the Academy has noted that this proposed regulation describes an enrollment system that is unduly intrusive and onerous in the extreme.

For example, if physicians must regularly update every item on the proposed forms as proposed, it would constitute a large, new regulatory burden on physicians and their staffs. Further, the variety of detailed items requested within the enrollment forms raises questions about how Medicare carriers will be able to undertake the substantial expansion of responsibility to process, store and verify the material contained within.

We cannot conceive why CMS would create such a giant new regulatory scheme to gather information on physicians. In recent years, CMS has made great efforts to reduce the regulatory burden on physicians. The proposed rule moves the agency away from its goal of reducing the needless paperwork burden placed on physicians. At a time when many physicians are questioning their continued involvement with the Medicare program, the revised enrollment forms and proposed re-enrollment process are not helpful. The AAFP asks the Conference Committee to direct CMS to reconsider the physician reenrollment regulation in consultation with medical specialty societies.

The Senate bill contains a provision (Sec. 224) that would require the Institute of Medicine to evaluate leading health care performance measures and the implementation options that would align performance with payment under the Medicare program. The Academy supports the development of such performance measures, and we appreciate the explicit provision that payment policy … will reward performance [Sec. 224 (a) (2) (C) (ii)]. We remain concerned, however, that CMS may try to interpret the results of the IOM study as a mandate to reduce payments generally, rather than as a program to reward those who are surpassing performance goals. We ask the Conference Committee to clarify its intention to reward excellent performance and not to use this as a cost-containment mechanism.

State Medicaid programs have seen a dramatic increase in operational costs in the last few years producing growing shortfalls in state budgets. The costs of prescription drugs are a significant component of those cost increases. Additionally, the elderly and disabled poor, who are dually eligible for Medicare and Medicaid, utilize a greater proportion of state Medicaid dollars for their treatment. For example, they account for 25 percent of the Medicaid population but use 50 percent of the available dollars for pharmaceuticals. Sec. 103 (c) of H.R. 1 stipulates that the federal government will gradually assume the responsibility of paying for dual eligibles by 2020. Given the financial condition of state budgets, this transfer of responsibility reduces a serious strain on state revenues and strengthens the health care safety net. AAFP recommends that the conference agree to the House provision.

The AAFP has long advocated for universal insurance for America’s families. Sec. 605 of S.1 offers states the option to cover, under their Medicaid program, both pregnant women and children who are legal immigrants. This option will allow states to steer Medicaid eligible patients towards a primary care provider and not encourage these individuals to seek more costly care at the county hospitals emergency room. AAFP supports this provision.

Sec. 450H of S.1 addresses the issue of providing telehealth services across state lines. While it is admirable to authorize creative technical solutions to provide health care in underserved areas, this proposal leaves more questions than it answers in terms of addressing the complex issues of multiple state licensure, multiple state reimbursements, and multiple state medical liability insurance policies. These important issues are not necessarily impossible to reconcile, but require thoughtful coordination.

AAFP opposes the creation of unreasonable barriers to the practice of telemedicine across state borders by state licensing boards. Therefore, the Academy supports the approach embodied in Sec. 450 of the Senate bill, but recommends that Congress strengthen the advisory role of physicians and other health care providers and patients in the development of the implementing regulations. We suggest that any regulation should include (but not be limited to) capabilities, technical standards, costs and cost-effectiveness, reimbursement policies, efficacy, acceptability to providers and patients, appropriate use, and development of processes of care via telemedicine that are associated with optimal patient outcomes.

The House bill contains a provision (Sec. 415) that would extend the telemedicine demonstration project for three years. The Academy believes that an effective telemedicine system would assist beneficiaries in remote, underserved areas and we hope that the final bill would include this provision.

Thank you for your consideration of these issues. The AAFP will be pleased to assist you and your staff in whatever way would help in the weeks ahead.

Sincerely,


Warren A. Jones, MD, FAAFP
Chair, Board of Directors