2010 MPFS: CMS proposes 21.5% physician pay cut (yes, really)

Let's go down the rabbit hole with the federales. 

Remember the Sustainable Growth Rate, that congressional hedge against inflation of health care costs, specifically payments under the Medicare Physician Fee Schedule?  Well, the CY 2010 MPFS went on display yesterday, and is due to be published in a couple weeks.  As written, the rule would (among other things) fully implement the SGR by cutting physician payments 21.5% (see the press release).  That's because Congress has overridden every other cut mandated by the law since 2002, yet has not taken the time to rethink it — even though it called for a review in 2005's DRA, and MedPAC obliged in 2007.  To cut to the chase, MedPAC recommended that Congress either (a) come up with another cockamamie formula or (b) repeal the SGR and develop incentives for providers to provide higher quality care at lower cost.  Yes, they've done a fine job so far . . . .

So, we all know that Congress will step in before the rule takes effect January 1, 2010; perhaps it will be in a systematic way this time, however, with a real replacement for the SGR wrapped into a broader health care reform bill.  The Tri-Committee bill in the House (see sec. 1121, p. 181) is the only leading bill that addresses this issue head-on, as far as I know (please let me know if I'm missing something), though it does not include a radical enough reformation and seems to fall in line with MedPAC recommendation (a).

As the WSJ Health Blog notes, another part of the crazy logic at work in the draft rule is a CMS proposal to carve out reimbursement for physician-administered drugs ($87.5B over ten years, per the CBO) from that which is subject to the SGR.  That would help with the narrow issue of how-many-percentage-points-of-the-SGR-can pass through the eye of a needle, but obviously doesn't address the fundamental systems issue.  (I'll take (b) for $2.4 trillion, Alex.)

There's plenty of other goodies in this draft rule — especially around imaging — but the big across-the-board cuts certainly deserve the headline.  For example:

• Capital reimbursement for physician-office diagnostic equipment was originally calculated by CMS based on the assumption of a 50% utilization rate.  Since the actual utilization rates are much higher, that assumption is now being formally thrown out the window.

• Under MIPPA, imaging providers will be subject to new accreditation requirements as of January 2012; accreditation organizations are identified in the rule, and additional controls will be forthcoming in separate rulemaking.

• Finally, more measures are being added to the PQRI set, and automatic EHR-to-CMS reporting is being explored (as is the case with hospital RHQDAPU reporting), as pay-for-reporting (in lieu of meaningful pay-for-performance) continues at the Federal level.

Bottom line: This is a complicated set of issues, but it is only one of many that Congress and the President hope to have all wrapped up neatly by November.  Perhaps a post-SGR approach to physician payment will help build the coalition necessary for meaningful systemic reform.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting