April 1997 Bulletin

Time to say 'enough is enough'

My first Across the President's Desk column will focus on the serious impact the proposed modifications and reductions in Medicare reimbursement may have on orthopaedic care. These potential reductions threaten quality and access to medical care for our senior citizens. In addition, some of the current managed care contracts in Southern California are jumping on the bandwagon by discounting the current Medicare reimbursement rates for orthopaedic procedures by 10 to 15 percent in anticipation of payment changes coming in 1998.

The emphasis on these reimbursement issues should not be misinterpreted to mean the Academy has moved away from our core value of meeting the educational needs of our members and the patients we serve. However, I think it is the Academy's responsibility to vigorously oppose any governmental action which may threaten our ability to provide the highest value-added care for our patients.

When any payer expects the same level of care and then cuts reimbursement so low we cannot do it, we must be heard. The time has come to say, "enough is enough," not only for our patients but for ourselves. Your voices will be heard clearly and thoughtfully at the Health Care Financing Administration (HCFA) and in Congress as we speak for fair and reasonable reimbursement under Medicare.

The latest proposal by HCFA is to institute resource-based payments for practice expenses which could reduce payments for orthopaedic services by 9 to 16 percent. Before the resource-based relative value scale (RBRVS) was established, Congress told HCFA to make sure Medicare payments reflected the actual resources used to provide medical services - thus, the term resource-based. Medicare payment rates were supposed to cover three factors which make up the cost of medical services: your work as a physician; your practice expenses, covering your staff, equipment, office and other overhead; and your medical malpractice insurance costs. Physician work and practice expenses together make up 95 percent of your payment, with the remainder going to medical malpractice costs.

When the RBRVS started in 1992, HCFA only had time to do a study of the resources used to provide physician work. It contracted with William Hsiao, PhD, and the Harvard School of Public Health to do what became a very controversial study. The results have been contested ever since by the Academy and other specialty societies. Studies of actual practice costs and malpractice insurance payments were put on hold until some future unspecified date.

More cuts ahead

Thus, when the RBRVS started, the only portion of it that was actually based on a study of resources was the physician work portion. Payments for the practice expense and malpractice insurance cost portions were based on a formula using the old Medicare (pre-1992) payment system. We experienced dramatic cuts in our Medicare payments due to the implementation of the RBRVS, along with limits on balanced billing. We face a more serious reduction as HCFA gets ready to modify the Medicare system again.

Two years ago, Congress told HCFA to establish "resource-based" payments for the practice expense part of the RBRVS. From the start, HCFA had tremendous difficulties with developing a credible study. There were problems just determining how to do it and how to involve the right mix of physicians and practice managers. There was continual trouble meeting deadlines under a timetable which increasingly seemed unrealistic. The Academy and other specialty societies tried to get Congress to allow a one-year delay in collecting data for the new payment system. This would allow HCFA and all of us more time to do an appropriate study. The AMA also supported this position, but Congress did not act.

A few months ago, the study collapsed. The survey of practice costs, involving more than 5,000 practices, failed because of the difficulties that the practices were having filling out the survey. The research team hired by HCFA to do the study was released and further work on the survey was canceled.

Now HCFA is planning to establish practice cost payments using much less reliable data through an approach which, by its own admission, the agency has not fully worked out. There are several alternatives being considered. (See table at end of column.) Under each of these alternative approaches, payments for orthopaedic services may decrease by 9 to 16 percent. Several other specialties may experience even greater cuts. For example, payment for cardiac surgery may decrease by as much as 44 percent while payments for thoracic surgery may decrease by up to 40 percent. Neurosurgery payments may see a 30 percent cut. On the other side, payments to chiropractors may increase 27 to 54 percent while payments for podiatric services may increase by 23 to 41 percent. Internal medicine, which expected large gains, may only get a 1 to 4 percent increase. Family practice projections do better with a possible 9 to 19 percent increase.

The Academy has taken the position HCFA should have a new study designed and implemented to generate accurate practice cost data from actual physician practices as Congress originally intended. Moreover, Congress should delay its January 1998 deadline for the new payment system to allow for an appropriate study to be completed. The Academy is approaching this issue through a variety of activities divided into two phases.

Phase one

Your Board of Directors approved $235,000 at their February 1997 meeting for the following activities:

Legislative activities. The Practice Expense Coalition, an organization of 25 medical associations which is co-chaired by the Academy, has contracted with a lobbying firm to work full-time on the practice expense issue for the next six to nine months. The objective is to try to persuade Congressional members that the current HCFA practice cost study should be stopped because it does not involve the kind of in-depth research that Congress intended.

Legal activities. The Practice Expense Coalition has asked legal counsel to conduct an analysis of litigation possibilities. This analysis will include an assessment of relevant case history to determine if there is legal precedence to pursue a temporary restraining order because of HCFA's failure to conduct its practice expense study as Congress originally intended.

Direct mailing to Academy fellowship. The Academy has budgeted funds to send up to three separate mailings to fellows, alerting them of the impact of this issue on the practice of orthopaedic surgery and giving updates on the Academy's activities.

Data collection and analysis. The Academy will access a Medicare Part B database to assess the estimated impact of the new practice expense payment system on orthopaedics and other specialties. This data collection effort would also be used to determine if there are any less onerous, alternative ways to HCFA's likely redistribution practice expense dollars. The results of this data collection and analysis project will be used in our legislative efforts with Congress and communications to the fellowship.

Analysis of proposed rule. HCFA has stated that it will publish its proposed new practice expense relative values on or around May 1, 1997. There will be a 60-day public comment period following publication. The Academy will analyze the methodology used to develop the practice expense relative values in order to prepare comments to HCFA.

External public relations campaign. The Practice Expense Coalition members may direct their communications/public relations departments to coordinate a public relations campaign in an effort to communicate this issue to the general public. The campaign would emphasize access for Medicare beneficiaries and quality of care issues.

Phase Two

If the strategies outlined above are not successful and new practice expense payments are implemented in 1998, HCFA will conduct a refinement process. During this process, specialty societies and all other interested parties will be invited to submit data on physician practice expenses to refute the new practice expense relative values. If HCFA is convinced that corrections in practice expense relative values are warranted, these changes would occur in 1999.

Even if the new practice expense payments are not implemented in 1998, HCFA may still be required to develop and implement a new payment system for practice expenses at some point in the near future. Under any scenario, it is important for the Academy to gather accurate practice expense data for orthopaedic procedures in order to determine the validity of HCFA's data. We soon will have some data as a result of the previous Board of Directors action. In December 1996, your Board of Directors approved $80,000 for a detailed time-motion study that will determine the actual physician practice costs associated with a select group of orthopaedic procedures. This data should prove to be beneficial.

The real issue in this cost cutting is the solvency of Medicare and the future financing of health care in this country. We need to continue to be part of a more realistic solution that empowers patients, gives access, maintains quality and allows portability. Medicare, as it exists, is in serious trouble and our politicians are avoiding working on realistic solutions. We will continue to be buffeted until true restructuring is seriously undertaken. In the meantime you and your patients will be represented in these debates by the Academy. We will be requesting your involvement as this debate unfolds. Do not underestimate the potential significance of what is happening in Congress.

I'd like to end this column by saying that I assume the presidency of the Academy with both humility and confidence. Humility because of the strong leadership I am following and knowing many others could serve in this position very well. Confidence because of the outstanding professional staff, Board of Directors and a talented and dedicated membership available and willing to help. In addition, the past two years have provided me with a steep learning curve. Two past presidents, Dr. DeHaven and Dr. Strickland, will remain on the Board this year bringing their experience to our deliberations. Dr. Heckman and Dr. D'Ambrosia, following in the presidential line, will continue the tradition of strong teamwork.

As we did at the Annual Meeting, I want to pay tribute on all our behalf to Ken and Jean DeHaven. They were outstanding leaders this past year with real sensitivity and courage. It has been a pleasure to work with and follow Ken into this position. Ken and Jean, a job well done.

Douglas W. Jackson, MD

Special acknowledgment to Robert C. Fine, JD, for assistance in preparing this column.

HCFA proposed resource-based practice expense relative value units - option two

CPT/HCPCS Description Preliminary
impact of
RVU change
M0007 Combined phys ther mod & tx (21%) 0.35
20550 Inj tendon/ligament/cyst 104% 0.38
20600 Drain/inject joint/bursa 105% 0.47
20605 Drain/inject joint/bursa 105% 0.45
20610 Drain/inject joint/bursa 97% 0.45
20670 Removal of support implant 120% 0.74
22554 Neck spine fusion (34%) 19.81
22612 Lumbar spine fusion (29%) 19.22
22625 Lumbar spine fusion (35%) 21.93
22842 insert spine fixation device (49%) 19.62
22845 insert spine fixation device (46%) 15.97
23412 Repair of tendon(s) (25%) 13.37
23420 Repair of shoulder (25%) 14.68
23470 Reconstruct shoulder joint (29%) 16.76
23472 Reconstruct shoulder joint (38%) 23.33
23600 Treat humerus fracture 24% 2.90
23616 Repair humerus fracture (37%) 22.32
25600 Treat fracture radius/ulna 39% 2.84
25605 Treat fracture radius/ulna 17% 3.95
26600 Treat metacarpal fracture 97% 1.54
27125 Partial hip replacement (33%) 16.91
27130 Total hip replacement (38%) 23.91
27132 Total hip replacement (40%) 27.44
27134 Revise hip joint replacement (41%) 31.41
27137 Revise hip joint replacement (38%) 24.31
27138 Revise hip joint replacement (38%) 24.23
27235 Repair of thigh fracture (32%) 14.10
27236 Repair of thigh fracture (34%) 16.91
27244 Repair of thigh fracture (33%) 16.30
27245 Repair of thigh fracture (29%) 16.30
27446 Revision of knee joint (35%) 19.79
27447 Total knee replacement (39%) 25.31
27486 Revise knee joint replace (37%) 21.74
27487 Revise knee joint replace (41%) 29.50
27488 Removal of knee prosthesis (30%) 16.16
27506 Repair of thigh fracture (29%) 16.02
27507 Treatment of thigh fracture (32%) 16.02
27511 Treatment of thigh fracture (34%) 16.00
27513 Treatment of thigh fracture (30%) 16.02
27524 Repair of kneecap fracture (27%) 10.34
27786 Treatment of ankle fracture 54% 2.52
27814 Repair of ankle fracture (17%) 10.00
28470 Treat metatarsal fracture 112% 1.80
29075 Application of forearm cast 76% 0.61
29405 Apply short leg cast 57% 0.79
29425 Apply short leg cast 45% 0.97
29826 Shoulder arthroscopy/surgery (23%) 11.44
29877 Knee arthroscopy/surgery (22%) 9.13
29879 Knee arthroscopy/surgery (27%) 10.55
29880 Knee arthroscopy/surgery (27%) 10.95
29881 Knee arthroscopy/surgery (23%) 9.54
63030 Low back disk surgery (33%) 15.50
63042 Low back disk surgery (38%) 22.10
63047 Removal of spinal lamina (38%) 19.32
72100 X-ray exam of lower spine 10% 0.74
72170 X-ray exam of pelvis 25% 0.57
73030 X-ray exam of shoulder 26% 0.62
73110 X-ray exam of wrist 38% 0.59
73140 X-ray exam of finger(s) 61% 0.46
73500 X-ray exam of hip 28% 0.53
73510 X-ray exam of hip 17% 0.64
73560 X-ray exam of knee (11%) 0.57
73562 X-ray exam of knee 26% 0.63
73564 X-ray exam of knee 30% 0.69
73610 X-ray exam of ankle 31% 0.59
73620 X-ray exam of foot 34% 0.54
73630 X-ray exam of foot 31% 0.59
97010 Hot or cold packs therapy 162% 0.21
97014 Electric stimulation therapy 140% 0.20
97032 Electrical stimulation 164% 0.14
97035 Ultrasound therapy 208% 0.11
97110 Therapeutic exercises 109% 0.13
97112 Neuromuscular reeducation 108% 0.13
97124 Massage therapy 140% 0.11
97530 Therapeutic activities 95% 0.17
99201 Office/outpatient visit, new 110% 0.37
99202 Office/outpatient visit, new 70% 0.45
99203 Office/outpatient visit, new 51% 0.52
99204 Office/outpatient visit, new 28% 0.78
99205 Office/outpatient visit, new 23% 0.85
99211 Office/outpatient visit, est 171% 0.19
99212 Office/outpatient visit, est 90% 0.28
99213 Office/outpatient visit, est 58% 0.38
99214 Office/outpatient visit, est 33% 0.50
99215 Office/outpatient visit, est 13% 0.76
99222 Initial hospital care (12%) 1.04
99231 Subsequent hospital care (27%) 0.38
99232 Subsequent hospital care (24%) 0.45
99241 Office consultation 54% 0.64
99242 Office consultation 35% 0.77
99243 Office consultation 21% 0.97
99244 Office consultation 11% 1.23
99252 Initial inpatient consult (16%) 0.76
99253 Initial inpatient consult (19%) 0.95
99254 Initial inpatient consult (21%) 1.20
99255 Initial inpatient consult (23%) 1.57

Numbers in parenthesis indicate reductions in total RVUs

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