The cost of the pay fix is estimated to be $19 billion. As a possible harbinger of things to come, the offset of the cost of the program comes from a provision in the Patient Protection and Affordable Care Act (PPACA).  The line item affected allowed for tax credits for wage earners at or near the poverty line who pay their own insurance premiums.

The passage of the bill freezes the current fee schedule until December 31, 2011. This gives Congress yet another year to devise a replacement to the Sustainable Growth Rate (SGR) formula. The SGR was brought forward in 1997 as a solution to Medicare spending. In every year since, Congress has passed a delay in scheduled cuts, leading to the 25% cut level now removed from the table for 2011.

The next deadline to present itself will occur at the end of the calendar year, where a combination of cuts in CMS’ final rule amounting to 26.8% is set to take effect for 2011.

The Senate Finance Committee is currently working on a bill seeking a one-year delay for these looming cuts in order to allow the next Congress to work on a long-term solution to the Sustainable Growth Rate formula, a “balanced budget” contrivance of Congress from the 1990’s, which ironically has shown itself to be unsustainable. With a newly elected Congress pushing austerity measures at all costs, and a lame duck session about to adjourn permanently prior to the holidays, a solution would not seem to be forthcoming.

Beyond this frivolity lies the cold hand of reality for those of us involved in health care, namely the year-end litany of oncoming regulations and news updates.

With 2010’s relentless focus on the Patient Protection and Affordable Care Act, a few less notable regulations have tended to fall out of focus. One of the biggest of these is the five-times-delayed Red Flags Rules from the Federal Trade Commission.

To refresh everyone’s memory, the Red Flags Rules instruct anyone who is defined as a “creditor”, to establish internal identification processes, or “red flags” (get it?) for preventing identity theft. The FTC has insisted from the time of introduction of the rules that physicians fall under the definition of “creditor”, as they are rarely paid in full at the time of service.  

On May 21, 2010, the AMA, along with the American Osteopathic Association and the Medical Society of the District of Columbia, filed suit in federal court in an attempt to stop the FTC from applying the rules to physicians. Their central argument was that the FTC, in defining physicians as creditors, exceeded its regulatory authority. The filing of this suit followed an earlier case involving the American Bar Association (ABA), which sued the FTC using the same reasoning, and eventually won. This ruling is currently being  appealed by the FTC. On June 25, the FTC and the stated plaintiffs in the May filing agreed to a delay of rules implementation for physicians until 90 days after the decision in the ABA case. A look at the calendar of the D.C. Court of Appeals for the remainder of 2010 shows that oral arguments in the appeal of the ABA case are not currently scheduled.

On August 17, the Council of Medical Specialty Societies filed a motion to intervene as plaintiffs in the AMA suit, stating that only a small portion of the physician community is represented by the originating parties filing suit. A decision on this motion has yet to be released.

The result of the above pending litigation currently adds up, once again for the physician community, to “delay”. With the latest FTC-stated deadline for enforcement of the Red Flags Rules being December 31, 2010, odds are that the question of physicians being covered under these rules is a long way off. However, while not currently mandated, I would find it to be a good idea for physicians’ offices to develop policies to ensure that the patients they are treating are indeed who they portend to be upon presentation for services.

In other, more immediate news, the U. S. Senate passed a one-month extension of the current Medicare physican fee schedule this week. If the House passes this pending legislation prior to December 1st, a scheduled 23% reduction in the fee schedule will be delayed until January 1st, which will then combine with a previously legislated 6.1% reduction to form the Mecha-Godzilla of all physician cuts.

Enjoy time with family (even that weird uncle), the good food and (if you’re a Dallas Cowboys fan) the bad football this Thanksgiving.

We are a money culture. From the 5-year-old with a lemonade stand to the pensioner complaining that in their day they could buy the entire restaurant for $5, you are hard-pressed to find someone who doesn’t realize the necessity of money in their lives. Income becomes the determining factor in what you eat, what you wear, the quality of the roof over your head, how you get around and how you spend your ever-diminishing spare time.

Now let’s say that your biggest source of income warns you that without a legislative fix, 23% of the money you receive will disappear in 2 1/2 weeks. I am guessing that a range of emotions would fill your head, many of those being negative.

Welcome to the world of your physician.

On December 1st, the Medicare conversion factor is set to decrease by 23% percent from its current jury-rigged levels stemming from temporary fix legislation passed in June. Without modification, this will be followed in short order by an additional 6.1% cut on January 1st. Fixing the problem now falls to a lame duck session of Congress, many members of which will be more focused on tax cut legislation, cleaning out their desks and preparing resumes for jobs in the lobbying industry.

Whenever this yearly threat raises its head, I am always amazed at the relative silence coming from the patient population most served by the Medicare program. Physician advocacy organizations make their usual statements, complete with adjectives such as “catastrophic” thrown in for good measure, yet nary a sound emanates from the patient population.

The Medicare program offers many things, but the most important of these is buying power. Without Medicare, the budgets of the rapidly-expanding population of older citizens would be forced to find other coverage options that would more than likely not be as forgiving to their limited budgets. A world where Medicare reimbursement is reduced by 24% forces physicians into a position of not accepting appointments for new or established patients with Medicare as their primary coverage, based on reimbursement suddenly being out of line with practice expense.

It is a mistake to think physicians are immune to the sudden income hit, but  people who rely on the omnipresence of Medicare acceptance as the main driver of personal health care decisions face an uncertain (I could go so far as to use the somewhat macabre word “abbreviated”) future. Insurance coverage buys access. Without access, the oldest and sickest among us are suddenly most at risk.

The verbal warning shots being fired in advance of Congress reconvening this coming Monday tell me that a temporary fix is on the table, but exists somewhere near the bottom of the legislative priority list behind tax cut extensions, judicial appointments and campaign finance reform legislation. The AMA plans to inundate Congress with blunt reminders of what is at stake in this debate. I challenge Medicare patients to do the same as third party stakeholders. It has never been easier to contact your current representative in Congress and have your feelings known. With the holiday season and sunsetting careers converging in the same space, the physician pay fix needs to be closer to the top of the agenda, and many voices make a chorus.

Wednesday evening, I went to a local concert venue to see Bob Mould, a legend of punk rock and college radio, who informed the audience that he turned 50 a week ago. I have been listening to Bob in his many musical permutations for over 20 years, from the frenetic to the introspective, and despite the fact that it was his usual great show, you begin to feel the metaphorical vultures circling when your musical heroes get the AARP card in the mail. I’m still struggling internally with how I feel about this fact.

Yesterday, I spent the day at a seminar put on by the Wisconsin Medical Society regarding upcoming changes to the Medicare program. With the idea that change can be either good, bad or ugly, depending on how it is approached, I present an assortment of changes for the coming year, complete with hypnosis exercises to temporarily distract you from just how terrible the results of some of these changes could be.

As you lay back and begin to relax, I can at the very least start with some good news for providers with specialty designations of primary care, internal medicine, pediatrics and geriatrics. Beginning in January, and extending through the end of 2015 (dire Mayan calendar warnings not withstanding), physicians and mid-level providers with these specialty designations are eligible for a quarterly bonus of 10% if at least 60% of the allowed charges are from certain E/M codes. In the same time frame, general surgeons are also eligible for a 10% bonus if they perform surgical services with a 10 or 90-day global period in a Health Care Professional Shortage Area (HPSA).

As I swing a pocket watch in front of your eyes and you feel your eyelids getting heavier, I bring you news of an expansion of preventive care in the Medicare program. Beginning January 1, 2011, Medicare beneficiaries will be eligible for an annual wellness visit. While this development is long overdue, there are three problems with this benefit, the first of which is that any Medicare contracted provider can perform this visit. As only one visit is allowed per year, it will be up to aging patients and frustrated office staff to track one visit in a 12-month span. Second, the “Welcome to Medicare” visit and the new annual wellness visit cannot both be paid within the same 12-month period, which becomes yet another tracking headache. Finally, the documentation standards for the annual wellness appear to be just as onerous as the “Welcome to Medicare” visit. For me, this provides a training opportunity. For the physician community, this represents an opportunity to yell and give dirty looks to the person providing the training.

As you feel all the tension disappear from your neck, shoulders and spine with your eyes completely closed, listening to the cool, clear water running in the happy place of your mind’s eye, I remind you again of the major expansion of payment audits. The Obama Administration has vastly expanded the audit programs centered around the Medicare and Medicaid programs, in addition to the expansion of the Recovery Audit Contractor program into Medicaid in 2011, there is also a relatively new and aggressive entity referred to as the HEAT Task Force, a combined effort by the Department of Justice and the Department of Health & Human Services to make the combating of health care fraud a cabinet-level priority. Recent testimony pegged the amount of fraud in the Medicare system at $54 billion for 2009. The stated goal is to reduce this number 50% by 2012. For those of you in the reading audience who aren’t calendar enthusiasts, there are only 435 days left until 2012. Things are about to get nasty in the audit world.

As you watch glitter-throwing sprites flit above marzipan flowers and waterfalls of pure, sweet Merlot wine, the biggest change is one that has yet to be corrected, this being the ongoing threat of drastic percentage reductions to the Medicare Physician Fee Schedule. Without action in the upcoming post-election, lame duck sessions of Congress, a 23% reduction is set to be implemented on December 1st, 2010. Thanks to the ongoing fire drills of Spring with regard to this issue, we know that CMS can place a hold of ten working days on claims, which makes the actual deadline to fix this life-altering decrease December 14th. As if this wasn’t enough, the fee schedule for 2011 currently includes an additional reduction of 6.1% which takes effect January 1st. It remains to be seen whether the last session of the current Congress will be in the mood to alter a landscape that puts the health care, and by extension the lives, of Medicare beneficiaries, at risk. The Senate being the place where useful legislation goes to die, you’ll pardon me for my skepticism this time around.

When you open your eyes, you will remember everything. Welcome back to the new reality. A snifter of brandy and a few Valium can be found on the small table near the exit.

The legislation that originally contained the pay fix was returned to the Senate for consideration by House Speaker Nancy Pelosi on Friday June 18th. In addition to the pay increase, the larger bill contained extensions of unemployment benefits and supplemental payments to the states to augment Medicaid programs. Senate Majority Leader Harry Reid spent the second half of yesterday afternoon attempting to garner the 60 votes needed to advance the legislation to a full vote on the floor. Ultimately, his efforts failed when the cloture vote tally of 57-40 doomed the bill. Minutes after the Senate vote, the House, by an overwhelming majority, passed the breakaway bill containing the pay fix that was sent to them late last week. The legislation was signed this morning by President Obama.

CMS has been processing claims with a 21.3% cut for the last 5 working days.  It is expected that CMS will soon announce that claims are now going to be processed at the pay fix rate. Any claims that have been processed over the last week will need to be reprocessed at the new, higher rates absent the previous cut.

While this legislation brings the latest chapter in this drama to a close, the story will begin anew as December 1st approaches. If either another temporary remedy affecting the fee schedule or a permanent fix to the Sustainable Growth Rate (SGR) formula is not passed prior to this date, physicians will face a 23% across-the-board cut in reimbursement.

I invite you to look very carefully at the mathematics involved with this. The conversion factor for 2010 was frozen at the beginning of January at 36.0846. Due to the larger health care reform legislation passed earlier in the year, the conversion factor was decreased for all 2010 claims to 36.0791. This did not affect claims already processed, but if you have recently submitted claims to your contractor for dates of service from early 2010, you may have noticed that the payments are decreased by a few pennies from how similar services were processed in the beginning of the year. The 2.2% increase now in effect applies to the lower, updated conversion factor.

While the latest conversion factor for the six-month period has not been released as of yet, a 2.2% increase to 36.0791 gives you a number in the neighborhood of 36.8728. Now, let’s suppose for purposes of envisioning the worst-case scenario that a 23% cut goes into effect on December 1st. This cut would be applied not to the temporary conversion factor, but the legislated conversion factor of 36.0791, which would give you a conversion factor closely resembling (again, not exact due to a lack of CMS announcement at the time of this writing) 27.7809.

The conversion factor is slated to take a further hit at the beginning on 2011, which would result in reductions that would bring the total net cut very close to the 30% range. Words have yet to be devised that would fully describe the negative impact on the healthcare delivery system in the United States that occurs if such a cut ever takes place.

For now, enjoy the summer sun and bask in the beauty of Autumn’s color when it arrives, as it could very well be a winter longer than any other we’ve ever experienced.

This past Saturday, House Speaker Nancy Pelosi (D-CA) made it very clear that she was not inclined to pass the Senate bill unless it is part of a larger measure similar to what the House passed in late May. It appears from a cursory look at the House calendar for yesterday and today that Pelosi was not bluffing. Yesterday’s legislative session in the House was dedicated to such weighty issues as a recognition of National Caribbean-American Heritage Month and a discussion of a resolution supporting National Men’s Health Week. Today’s calendar continues the focus on just the sort of topics that should shoot straight up to the top of the legislative calendar when there is near-10% unemployment, two wars and the looming threat of Medicare patients not receiving medical treatment: a discussion of the Formaldehyde Standards for Composite Wood Products Act and the Congressional Award Program Reauthorization Act (who would want an award from these people?). Sixteen other bills and resolutions are on the House calendar for today, and the Senate pay fix bill is not one of them.

Here’s a tip for the House of Representatives: the best way to insure that National Men’s Health Week comes off as a success is to make sure that men, and indeed all people, of Medicare age do not have their relationship with their physician threatened by a 21.3% percent cut in the doctor’s reimbursement.

I’ll continue to monitor the ongoing and oh-so-important work of Congress as the payment apocalypse continues. For now, as the headline says, there is indeed no news on this front.