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By: Bill Meltzer

Published: 10/10/2007

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Physician Reimbursement
Federal Government Reverses Physician Medicare Cuts
President Bush has signed a 2003 appropriations bill that includes a 1.6 percent increase in Medicare reimbursements to physicians. The law overrides a scheduled 4.4 percent decrease. Additionally, the legislation raises by $300 million Medicare payments for hospitals in rural and small urban communities.

For several months, the government has delayed enacting its 2003 appropriations budget that would have, among other measures, cut physician Medicare reimbursements by 4.4 percent Originally scheduled to take effect Jan. 1, the bill was delayed until March 1 while legislators worked on a bill to override the scheduled budget cuts.

In addition to superseding the cut, the law formally gives the Centers for Medicare and Medicaid Services (CMS) the authority to correct the Medicare payment formulas that resulted in such reimbursement cuts. A CMS spokesperson reports that the problem should be corrected before the agency determines future appropriations.

Surgical Hospital Controversy
Ohio Bill Seeks to Curtail Surgical Hospital Growth
A bill designed to cripple attempts to build surgical hospitals in Ohio is gaining momentum, according to a published report. The proposed legislation would prohibit physicians from taking cases to an inpatient facility in which the doctor has a financial interest. The bill would not affect how physician-owners of ASCs handle their ambulatory cases. J. Nick Baird, MD, Ohio's health department director, recently announced his support for the bill, which Gov. Bob Taft also supports.

Surgical hospitals threaten community hospitals by skimming profitable cases and leaving the money-losing cases to the nonprofits, said Dr. Baird in announcing his support for the legislation.

The bill was spurred by opponents of the New Albany Surgical Hospital, an orthopedics-based facility scheduled to open by fall.

Supporters of surgical hospital ventures deem the legislation and Dr. Baird's comments "insulting" and have pledged to fight the bill.

However, the anti-surgical hospital argument is nothing new.

Surgical hospital pioneer Alan Pierrot, MD, of Fresno, Calif., says surgical hospital ventures have long been accused of "skimming the cream." He counters that assertion by pointing out that, in many communities, non-profit hospitals have more leverage than their for-profit competitors by virtue of their tax-exempt status and their ability to sign exclusive reimbursement deals with HMOs via reimbursement discounts to the managed care companies.

ASC Reimbursements
OIG Recommends ASC Medicare Reimbursement Cuts
Joining a recent call to Congress by MedPAC for the reduction of ambulatory surgery center reimbursements that exceed the HOPD, the Office of Inspector General (OIG) has issued similar recommendations based on a study of 2001 ASC vs. HOPD data conducted by the office. The study examined 424 procedure codes for 2001 that represented 95 percent of Medicare-reimbursed ASC surgeries. OIG found that 66 percent of the time (279 CPTs), CMS reimbursed hospitals at a higher rate. The median difference was $282.22, with a range of $4.07 at the lowest end to $282.33 at the highest. For the remaining 34 percent (145 codes), CMS paid ASCs at a higher rate, with a median difference of $135.78 and a range of $3.18 to $410.39.

While the OIG recommendations call for Medicare to pay for ambulatory care based on the service, not the setting, they only recommend that the examined rates with higher ASC payments be immediately lowered by Congress. For overall rate correction, they call on CMS to do a new cost survey. OIG also recommends the extension of CMS's statutory power to calculate and correct site-of-service flaws in reimbursements.

The OIG recommendations go one step further than MedPAC's by also advising the deletion of 72 ASC procedure codes that OIG argues should be deleted under CMS rules, because the services are more commonly provided in the office setting. Current CMS update proposals only call for the deletion of six of these codes.

The total cuts recommended by OIG are $1.1 billion from reduced ASC reimbursements (according to 2001 data) and $8 to $14 million in deleted ASC codes.

To see the full report, go to http://oig.hhs.gov/oei/reports/oei-05-00-00340.pdf.

Service or Kickback?
Eye MDs Seek Anti-Kickback Exemption for Transportation
Federal anti-kickback statutes have traditionally discouraged facilities from providing transportation to surgical patients on the basis that the service could be construed as an illegal inducement to select the facility.

The Outpatient Ophthalmic Surgery Society (OOSS) is attempting to convince the Office of Inspector General (OIG) to issue a federal policy exemption for complimentary local transportation services provided to Medicare beneficiaries.

OOSS president Jerry Levy, MD, notes that in the scenarios in which a facility is likely to offer a free ride, such as cataract surgery, the patient is almost always elderly and may otherwise lack timely transportation to and from the facility. The organization reports that OIG has been receptive to efforts to create a clear anti-kickback exemption for such services.

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