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Fam Pract Manag. 2005;12(8):28-32

Bill would prevent pay cuts, launch pay for performance

Medicare payments to physicians could increase 1.5 percent in 2006 if Congress passes a bill introduced this summer. The Medicare Value-Based Purchasing for Physicians’ Services Act of 2005 (HR 3617) would repeal the flawed formula currently used to set physician payment rates for Medicare. Without congressional action, physicians will experience a 4.3 percent cut in Medicare payments in 2006 and a 26 percent cut through 2011.

The bill would also create a Medicare pay-for-performance program in 2007. Under the program, physicians would be paid 99 percent of the “Medicare economic index,” which reflects what Medicare figures it actually costs physicians to provide services, with the remaining 1 percent awarded for meeting quality and efficiency standards.

AAFP Board Chair Michael Fleming, MD, recently sent a letter commending Rep. Nancy Johnson (R-Conn.) for introducing the bill, but he cautioned that the bill’s implementation schedule may be too aggressive, not allowing small practices enough time to prepare for pay for performance. He also recommended that the bill focus on practice performance, rather than individual physician performance, to promote a team-based, practice-wide approach to improving patient care.

New law aims to shift culture from blame to prevention

Nearly six years after the Institute of Medicine reported that some 100,000 Americans die each year from medical mistakes, Congress has passed and President Bush has signed the Patient Safety and Quality Improvement Act of 2005, which will create a national database on medical errors and protect reporting physicians from liability.

“This patient safety law is the catalyst we need to transform the current culture of blame and punishment into one of open communication and prevention,” said J. Edward Hill, MD, AMA president. “When physicians can report errors in a voluntary and confidential manner, everyone benefits. Future errors can be avoided as we learn from past mistakes. This law strikes the proper balance between confidentiality and the need to ensure responsibility throughout the health care system.”

Who are the uninsured?

Nearly 17 percent of the U.S. population, or 48.3 million people, are without health insurance, according to data from the Agency for Healthcare Research and Quality. Minorities, particularly Hispanics, are substantially more likely than whites to lack insurance.

GroupPercent of U.S. populationPercent of uninsuredPercent with public insurance only
Hispanic or Latino15 percent29 percent25 percent
White non-Hispanics65 percent50 percent10 percent
Black non-Hispanics13 percent15 percent28 percent

Drug companies agree to new guidelines on consumer advertising

The Pharmaceutical Research and Manufacturers of America recently released a set of voluntary guidelines regarding direct-to-consumer prescription drug advertising, and 23 pharmaceutical companies have agreed to follow them.

The guidelines aim to eliminate misleading advertisements that may encourage patients to seek unnecessary prescriptions. The guidelines call on pharmaceutical companies to spend “an appropriate” amount of time educating physicians about new medications before launching consumer ads. They also suggest that companies eliminate ads that simply name a medication but do not explain its use or safety risks, and they discourage companies from making claims about their medications not supported by substantial medical evidence.

Critics say the guidelines do not go far enough.

Web site offers facts about Medicare's new drug benefit

Family physicians now have help in educating their patients about the new Medicare prescription drug benefit. The Medicare Rx Education Network, formed by the Centers for Medicare & Medicaid Services, the AAFP and other organizations, offers a useful Web site ( where physicians and patients can find basic information about the new drug benefit, including how to enroll and how much it will cost. All Medicare beneficiaries can enroll in the new program starting Nov. 15.

Those with limited incomes should have already received a Medicare Low Income Assistance form in the mail and should return it by mid-September.

Connecticut docs sue United and Oxford for coercion

Four physicians in Connecticut have filed a class-action lawsuit against United Healthcare (UHC) and Oxford Health Plans, alleging that the companies recently coerced physicians into accepting unreasonably low fee schedules. Following a merger of the two companies, UHC informed its participating physicians that they must also participate in an Oxford plan, which offers much lower reimbursement, or be terminated from UHC.

The suit states, “Most physicians cannot afford to replace their UHC patient base and have been railroaded into becoming an Oxford provider, despite the significant burdens this will impose upon their practice and, as a result, their patients.”

WellPoint settles with physicians for $198 million

WellPoint Inc., the nation’s largest health insurer, has agreed to settle its part of a class-action lawsuit brought by representatives of more than 700,000 doctors over allegations that Well Point unfairly delayed or denied reimbursements for health care services. The settlement includes $135 million in payments to doctors, $5 million for a nonprofit foundation aimed at improving health care for the disadvantaged and up to $58 million for legal fees. Under the agreement, WellPoint also will improve its payment system and its communication with physicians, and will establish an independent review board to resolve billing disputes.

WellPoint, which operates in most markets as Blue Cross and Blue Shield and recently merged with Anthem, is the fifth insurer to settle in this case. Aetna, Cigna, Health Net and Prudential previously settled. United Health Group, PacifiCare Health Systems, Coventry Health Care and Humana are set for trial in January.


Family physicians’ 2004 mean income (after expenses, before taxes): $143,600

Source: AAFP 2005 Practice Profile Survey.

Free EHR offered to physicians

The Centers for Medicare & Medicaid Services is offering physicians free access to an electronic health record (EHR) system based on an EHR system used for 20 years by the Department of Veterans Affairs. Called VistA-Office, the EHR system is geared toward smaller offices. Critics say it lacks some of the functionality of commercially available EHR products.

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Copyright © 2005 by the American Academy of Family Physicians.

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