Congressional Letters to CMS on Cuts to Radiation Therapy Centers In August, bipartisan letters began to circulate in the House and Senate objecting to the 19% cut to radiation therapy centers contained in the CY 2013 Physician Fee Schedule (PFS) Proposed Rule. This newsletter previously reported on those cuts. In the House, the letter is led by Energy and Commerce Health Subcommittee Chair Joe Pitts (R-PA) and Energy and Commerce Subcommittee Ranking Member Frank Pallone (D-NJ). In the Senate, the letter is led by Senate Finance Committee Members Debbie Stabenow (D-MI) and Richard Burr (R-NC). These letters take issue with the magnitude of the cuts to radiation therapy and the nature in which they occurred. In particular, the letters urge CMS to update all of the inputs to radiation oncology codes under review by the agency, rather than updating only a SEPTEMBER 2012 single input as the agency has done in the Proposed Rule. The letters are open for signature until the middle of September. Currently, there are 20 House signers and 10 Senate signers. The list of signers is included below. House of Representatives Senate Joe Pitts (R-PA) Debbie Stabenow (D-MI) Frank Pallone (D-NJ) Richard Burr (R-NC) Charles Bass (R-NH) Ben Cardin (D-MD) Marsha Blackburn (R-TN) Tom Carper (D-DE) Hansen Clarke (D-MI) Dan Coats (R-IN) Barney Frank (D-MA) Mike Crapo (R-ID) Tim Griffin (R-AR) Chuck Grassley (R-IA) Brian Higgins (D-NY) John Kerry (D-MA) Tim Murphy (R-PA) Robert Menendez (D-NJ) Sue Myrick (R-NC) Bill Nelson (D-FL) Rich Nugent (R-FL) Charlie Rangel (D-NY) Mike Rogers (R-MI) Dennis Ross (R-FL) C.A. Ruppersberger (D-MD) Pete Sessions (R-TX) Chris Smith (R-NJ) Debbie Wasserman Schultz (D-FL) Allyson Schwartz (D-PA) Bill Young (R-FL) PAGE 2 1,119 letters and 35 calls have been logged to date through the RTA website in support of these Congressional letters to CMS. Interested physicians may link here on the RTA website to urge their Representative and Senators to sign the Congressional letters to CMS. Wall Street Journal Article Reports on Increased Costs Following Hospitals' Acquisitions of Private Physician Practices According to an August 27 Wall Street Journal article, the purchase of private physician practices by hospital systems can lead to increased costs for insurers, Medicare and patients. Key excerpts from the article include: This year, nearly one-quarter of all specialty physicians who see patients at hospitals are actually employed by the hospitals, according to an estimate from the Advisory Board Co. That is more than four times as many as the 5% in 2000. The equivalent share of primary-care physicians has doubled to about 40% in the same time frame. The structural shift is being driven partly by declining reimbursements for physicians, particularly in certain specialties like cardiology. *Note: Cardiology was cut by 13% in the CY 2010 Physician Fee Schedule Final Rule and has received additional cuts under the PFS since 2010.+ With private insurers, hospital systems with strong market heft can often negotiate higher rates for physician services than independent doctors get. The differential varies widely, anywhere from 5% or less to between 30% and 40%, industry officials say. AHRQ Releases Review of Bundled Payment Programs On August 24, the Agency for Healthcare Research and Quality (AHRQ) released a review of 58 studies and four articles on bundled payment systems. According to the review, the evidence suggests transitioning from fee-for- service to bundled payments results in declines in spending and utilization. The review found inconsistency in quality measures, highlighting the importance of a strong quality component as part of a bundled payment system. Overall, reviewers gave the strength of evidence for these findings as "low," indicating that further research is required. However, the reviewers believed the direction of observed effects on spending and utilization likely would not change in future studies, although the magnitude might. The review noted that moving to bundled payments was generally associated with a decline in spending of 10 percent or less and a decline in utilization of 5 to 15 percent. A summary of the study is available here. The study itself is available here. A Systemic Approach to Containing Health Care Spending On August 1, a group of health care experts published a report in the New England Journal of Medicine outlining an 11-point plan to reduce health care spending. Among these proposals was a proposal to bundle payments for cancer as follows: Accelerate Use of Alternatives to Fee-For-Service Payment. Fee-for-service payment encourages wasteful use of high-cost tests and procedures. Instead of paying a fee for each service, payers could pay a fixed amount to physicians and hospitals for a bundle of services (bundled payments) or for all the care that a patient needs (global payments). Payers will need to accelerate the use of such alternative payment methods. As soon as possible, both public and private payers should adopt the bundles for 37 cardiac and orthopedic procedures used in the Medicare Acute Care Episode program. The bundles will also need to include rehabilitation and PAGE 3 post-acute care for 90 days after discharge. Within 5 years, Medicare should make bundled payments for at least two chronic conditions, such as cancer or coronary artery disease. Within 10 years, Medicare and Medicaid should base at least 75% of payments in every region on alternatives to fee-for-service payment. Together, these policies would remove uncertainty about transitions from fee-for-service payment, allowing sufficient time for investment in infrastructure and technology by payers and providers. An extensive review of the 11-point plan can be found here. Electronic Health Record Incentive Program Stage 2 Final Rule Released On August 23, CMS released its final rule for Stage 2 of the Electronic Health Record Incentive Program. Under the Health Information Technology for Economic and Clinical Health (HITECH) Act, eligible health care professionals (e.g. physicians) can qualify for Medicare and Medicaid incentive payments when they adopt certified EHR technology and use it to demonstrate "meaningful use" of that technology by achieving objectives set by CMS. In the graduated payment schedule provided under the HITECH Act, total annual bonus payments within the program can be up to $63,000 per physician. Medicare payment reductions for physician non-participation begin in 2015. Program objectives are made gradually more difficult according to a given "stage." This rule would finalize the proposal to delay the onset of stage 2 from 2013 until 2014 for any provider who entered the program in 2011 (and maintain the 2014 stage 2 requirement for providers entering the program in 2012). While the proposed rule lays out stage 2 objectives, the proposed rule also would make certain changes to Stage 1 requirements. Under the program, physicians are required to report on "core" and "menu" objectives as well as "clinical quality measures." For stage 2, CMS finalized its proposal that physicians would have to meet or qualify for an exclusion for 17 core objectives (up from 15 under stage 1); meet or qualify for an exclusion for 3 of 6 menu objectives (narrowed from a menu of 5 out of 10); and report on 9 clinical quality measures (up from 6). Physicians also can satisfy the clinical quality measure (CQM) reporting component if they submit and satisfactorily report CQMs under the Physician Quality Reporting System's (PQRS) EHR Reporting Option. The final rule also finalized the proposed objective relating to cancer registry reporting, but modified the objective to "Capability to identify and report cancer cases to a public health central cancer registry, except where prohibited, and in accordance with applicable law and practice." An AMA Summary is available here. An AMA Objectives/Measures Fact Sheet is available here. President Obama Signs Sequestration Transparency Act On August 7, President Obama signed into law the Sequestration Transparency Act, requiring the administration to detail specifics regarding the $1.2 trillion sequestration required by the Budget Control Act to be implemented on January 3, 2013. The Senate passed the bill unanimously and cleared the House in a 414-2 vote. The Sequestration Transparency Act requires the President submit, not later than 30 days after the date of enactment of the Act, a sequestration report providing, among other things, "an identification of the reductions required for each nonexempt direct spending account at the program, project, and activity level." Medicare is nonexempt direct spending under the Budget Control Act, although the sequestration applicable to Medicare is subject to a 2 percent cap. PAGE 4 CBO Releases its Budget and Economic Outlook Update On August 22, the Congressional Budget Office (CBO) released its updated Budget and Economic Outlook for FY 2012-2022. Key points from the update include: Cost of a "Doc Fix" Bill Potentially Lowered. In a July analysis, CBO estimated that a freeze in Medicare physician payment rates under the SGR would cost $18.5 billion over 10 years for a one-year freeze and $271 billion over 10 years for a freeze through the 10-year budget window. In CBO's August update, CBO lowers the cost of the estimate for a 10-year fix to $245 billion over 10 years, thereby potentially lowering the cost of a one-year freeze as well. Updated Estimate of SGR Cut. According to the report, Medicare's current payment rates for physicians' services are scheduled to drop by 27 percent on January 1, 2013 due to the SGR. Impact of Sequestration on Medicare. According to the report, the impact of sequestration on Medicare is an $11 billion cut in 2013 and a $123 billion cut over 10 years.