President’s Desk Column

Fixing the physician payment system

February 2003
Paul A. Raslavicus, MD

Washington is a city of politics. There is a lot of dancing around. There is simultaneous handholding and backstabbing. When our members, supported by our staff, enter this dance floor to represent the interests of pathologists, there is a lot of two-steps-forward, one-step-back motion. But worse things can happen. There’s not moving forward, for one. There’s interference from others who are not well versed in the political art or the underlying needs of our specialty, for another. There’s losing sight of the big picture, for a third, and expending resources on something that has no chance of becoming reality.

The 107th Congress went home last December. The Senate, hung up on the appropriate drug benefit for Medicare beneficiaries and jerked in other directions by the hospital lobby, failed to act on a House-passed bill that would have provided a reasonable drug benefit to our seniors and would have canceled the scheduled decrease in payment to physicians under part B of Medicare. Even the Centers for Medicare and Medicaid Services has realized that this formula for calculating the payment amount is flawed and warrants a change. But without congressional authorization to correct the admittedly erroneous input data, CMS has felt hamstrung.

Those mistakes—overestimating physician productivity, including the cost of some outpatient drugs in the physician target, and overestimating the number of Medicare beneficiaries that would enroll in lower-cost managed care plans and thus underestimating the cost of their care under the fee schedule—compound every year that they persist. They caused last year’s 5.4 percent cut in physician fees and are predicted to reduce payments by another 12 percent from 2003 to 2005, leaving Medicare payments to physicians in 2005 below 1991 levels. (At CAP TODAY press time, there were signs that the new Congress might act to avert a scheduled March 1 cut in 2003 payments.) At that rate of backward acceleration the options of not participating in Medicare or going to totally private contracting are worthy of consideration by some practitioners—raising the specter of lack of access to needed care for our seniors.

And now comes a step forward for pathology. The predictions for us, because of recalculations involving the technical and professional components, were even more gloomy. Observers said there was to be a 6.4 percent decrease for pathologists and a -12.4 percent for independent labs in 2003 alone. Instead, we argued that the direct practice expense costs were being underestimated and a more thorough study was needed. CMS has agreed with our position and has granted a one-year moratorium to allow time for the CAP to lead a study. So instead of seeing such decreases, we see only a 35-cent decrease in the value of 88305 while the technical component value for this code is held constant. All in all, we will be no worse off than other physicians in 2003. The mandated general physician decrease of 4.4 percent was announced on Dec. 31 (what a New Year’s present!) to go into effect on March 1. My hopes are high that the new Congress and the Republican majority—with a concerted push by the College and others— will correct the system and provide physicians some relief. The health needs of the elderly must be met.

By far this should not be the winter of our discontent. While we continue to address physician payment and appropriate conversion factors, we are pleased with the outcome of a number of our advocacy initiatives. The CMS ruling of Dec. 31 shows significant increases in the technical components for frozen sections, flow cytometry, and immunofluorescent studies, and there will be a nine percent increase in physician interpretation of cytogenetic studies.

On the matter of part A payment, last August I urged the Office of Inspector General of Health and Human Services to revise its hospital guidelines to clearly state that the fraud and abuse compliance requirements include a fair market value payment requirement for medical direction and supervision of hospital clinical laboratories. It is our position that no payment or token payment for pathologists’ medical direction and supervision services in exchange for permitting them to do surgical pathology violates the anti-kickback statute. While we await the OIG’s decision, we are pleased to see that at the meeting of the American Medical Association, the initiatives of the California Society of Pathologists and California Medical Association on this issue were successful. Thanks to the significant contribution of our members and staff who developed the report for the AMA’s Council on Medical Services, the AMA is now on record as being in concert with the CAP’s policy. The AMA will be an advocate for appropriate pay for pathologists for their services to Medicare patients in the clinical laboratories of our hospitals.

On another matter, and because of the College’s efforts, in the closing days of December, the CMS announced an administrative decision to extend the grandfather provision for payment of the technical component to independent laboratories for work they do for hospital patients. Sixty-one members of the House signed a letter we organized and sent to the CMS director asking for the delay. We now have additional time to work on making this grandfather clause permanent. It will help a number of pathologists and hundreds of their hospitals that have had such arrangements for years.

We have also finally seen the lifting of the freeze on the clinical lab fee schedule, which was in effect for the last five years. A 1.1 percent increase is not what we had hoped for, but at least it is a step forward. Looking ahead, we intend to participate in a consensus-driven process, recommended by the Institute of Medicine, to revamp the now archaic test fee schedule to reflect more accurately the costs of providing lab testing in various settings.

Yes, we pathologists have faced serious challenges in the last 20 years. We have been optimists; we have met the challenges, and we have addressed them. We have won many battles, and we have learned to live with some downsides. Because we do believe in the glorious mission of medicine and the dedication of our pathology practitioners to patients, the end of our concerns is not in sight. We are the vanguard for quality in patient care; we seek just compensation for our efforts. Reaching these ideals will take time, compromise, and patience. But that’s OK. We will do the job. Our stubborn optimism will prove out.