December 2002 Bulletin

Washington Report

Congress adjourns, fails to address reform

The 107th Congress adjourned in November without addressing two of the major issues affecting orthopaedic surgeons—liability reform and correction of the Medicare payment formula. Following are summaries of where these issues stand.

Little hope for liability reform

Despite the new Republican majority in Congress and repeated confirmation of support from President Bush, there is little chance that the 108th Congress will approve medical liability reform legislation.

The reason is a Senate rule, known as "cloture," which allows any member of the Senate to take the Senate Floor and speak indefinitely to delay action on legislation.

Today, it takes a vote of 60 members to end debate and allow a bill to actually be voted on by the Senate. Until that time, the Senate leadership will suspend debate and periodically revisit it until they feel they may have the necessary votes to close debate. Unfortunately, since there still are not 60 votes in the Senate that support this legislation, there will never be an opportunity to close debate.

In addition, even without this Senate rule, it is still unclear whether there is even a majority in the Senate that would vote for liability reform. Traditionally, most Democrats have opposed tort reform and most Republicans have favored it. In the 108th Congress, there is a new Republican majority of 51 Senators. However, even within their ranks, at least three Republicans have been vocal and formidable opponents of any type of liability reform: Senator Arlen Specter (R-Penn.), Senator Rick Santorum (R-Penn.), and newly elected and former House member Senator Lindsey Graham of (R-S.C.).

In July 2002, in the 107th Congress, the Senate by a vote of 57 ayes to 42 nays, tabled consideration of professional liability reform provisions. In the House of Representatives, in September 2002, a comprehensive liability reform bill, H.R. 4600, the Help, Efficient, Accessible, Low cost, Timely Healthcare Act (HEALTH), was approved by a vote of 217 ayes to 203 nays, but no further action was ever taken in the Senate. As it stands now, it is likely that we will see a repeat performance in each chamber in the 108th Congress.

So, while the AAOS continues to push this issue at the Federal level, under these circumstances, the best hope for liability reform continues to rest with individual State legislatures.

Correction of Medicare Payment Formula Remains Elusive

Congress also adjourned without having addressed the flaws to the Medicare physician payment formula. This situation is even more remarkable because a vast bipartisan majority of Congress actually cosponsored legislation introduced in 2001 to correct this situation (81 cosponsors in the Senate and 356 cosponsors in the House of Representatives).

With all medical societies, including the AAOS, making this a "number one" legislative priority, and a majority of Congress expressing support for taking action, the recurring question remains—why has the physician community not succeeded in its efforts? The answer is complex and multifaceted,and has changed at various times during the legislative process. Here are a few of the legislative and administrative hurdles:

The Rural Factor—Several Senators, especially on the Senate Finance Committee, including the new chairman, Senator Charles Grassley (R-IA), are concerned about the needs of rural providers who participate in the Medicare program. In particular, they are concerned about the geographical variance in Medicare payment. As part of the payment formula, there are multipliers for geographic practice, work, and liability components that have resulted in significant Medicare payment differences in various parts of the country. For some senators, any general correction in the payment formula must also address these geographical variances as well.

Proposed Increases for Other Participating Providers in Medicare—A number of members of Congress do not want to correct the physician payment problem without also addressing the concerns of other participants in the Medicare program, such as home health care providers and hospitals.

The Proposed Medicare Prescription Drug Benefit—Although not a factor in the closing days of the 107th Congress, the physician payment correction had been linked to the Medicare prescription drug benefit. In the past, several senior citizen groups aggressively opposed addressing the physician payment problem without first providing a prescription drug benefit under the Medicare program.

Republican Leadership and the Remnants of the Patient’s Bill of Rights Debate—Unfortunately, the relationship between the Republican Congressional leadership and certain physician groups that supported the Democratic version of the Patient’s Bill of Rights may still be an issue. Earlier this year, in an effort to rectify this situation, one umbrella group, in particular, supported the House version of the Medicare payment correction (Those provisions did not actually correct the formula, but instead provided temporary positive updates for three years and paid for them by imposing a severe double-digit decrease in reimbursement for subsequent years.)

While this endorsement may have been a calculated step to improve the strained relationship, there was concern among some specialty societies that were working in a bipartisan fashion to seek a more permanent solution. The AAOS, along with several other specialty societies that supported the Republican leadership on such issues as the Patient’s Bill of Rights, formed two coalitions (the Alliance of Specialty Societies and the Coalition for Fair Medicare Payment) to provide an independent alternative for seeking Congressional support. These groups have worked in a bipartisan fashion to seek relief.

End-run without Senate involvement—In the closing hours of the legislative session, physician payment provisions were attached to an unrelated House bill, without adequate or appropriate consultation with the Senate. These provisions did not address the payment issue directly, but instead protected the Centers for Medicare and Medicaid Services (CMS) from legal suit should it decide to correct the formula. Senate leadership was upset that they were not consulted, and they refused to consider the House-approved measures.

Legislative vs. Administrative fix—CMS claims that it does not have the authority to make administrative changes to the formula, even though it had the authority to make the original mistakes. CMS also states that Congress must change the law to give it the authority. Congress does not want to spend the money to make these corrections (it will probably cost about $100 billion), and it has repeatedly stated that CMS does have the authority to make the correction on its own. Thus, it seems as though the physician community is seeking relief in an environment where neither the administration nor Congress wants to take action.

Prospects for the 108th Congress

As a result of errors made by CMS, physician can expect yet another significant reduction in reimbursement for fiscal year 2003. Although the final rule has been delayed, it is expected to be published in December for implementation 60 days after the rule is published and to contain a Medicare payment reduction of 4.4 percent. When Congress returns in January, there will be a small window of opportunity of about four weeks to provide relief. Yet, all of these legislative and administrative hurdles remain.

It is imperative that physicians continue to contact their members of Congress and urge them to take action. The number for the U.S Capitol switchboard is (202) 224-3121. For complete background material on this subject, go to the AAOS Washington Web site.

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