HCFA fields criticism on physician payment reform, nears deadline - US Health Care Financing Administration - Brief Article

Healthcare Financial Management, Nov, 1991

As "Updata" went to press, HCFA faced Congressional challenges to its proposed new physician payment system that could prevent HCFA from meeting its implementation deadline. Law requires that the new system by in place by Jan. 1, 1992. To allow the required 60-day implementation period, HCFA would have to publish final rules by Nov. 1. Bills introduced in the House of Representatives, however, would significantly change the formulas used in the proposed system, making the Nov. 1 deadline unobtainable.

Rep. Fortney (Pete) Stark (D-Calif.) introduced the "Medicare Physician Payment Reform Amendments of 1991" [House Resolution (H.R.) 3070] to reverse HCFA's entire 16 percent reduction in the proposed payment system's conversion factor. The bill prevents HCFA from achieving the required first-year 2 percent budget neutrality adjustment solely through the conversion factor. In the proposed system, the 2 percent adjustment was magnified to 6 percent during the 5-year transition because fees above the fee schedule would drop more slowly than fees below the fee schedule would rise.

The bill also requires HCFA to use the Medicare Volume Performance Standards (MVPS) to control growth in physician services instead of resorting to a seperate behavioral offset. In its proposal, HCFA included a behavioral offset of slightly more than 3 percent, stating that the MVPS default formulas would not be sufficient to control the rise in services expected from the decrease in many physicians' payments. Again, because of the effects of applying adjustment only to the conversion factor, the total effect on physician payments was a decrease of 10 percent.

During hearings held on the proposed rule, members of Congress and physician industry representatives supported the use of the MVPS over a separate behavioral offset. HCFA Administrator Gail R. Wilensky, PhD, maintained that inclusion of such an offset is customary when publishing new payment rules. Physician groups say that explicit use of a behavioral offset in any new payment system is an accusation that physicians dishonestly adjust services based on payment levels rather than medical necessity.

A second bill repealing the prohibition against separate payment for electrocardiograms (EKGs) was introduced by Rep. Thomas C. McMillen (D-Md.) (see related story). At "Updata" deadline, H.R. 3070 had 108 co-sponsor, and physician groups were lobbying Congress on behalf of both bills.