AAOS Bulletin - February, 2005

Triumphs in 2004 set stage for challenges in 2005

Medical liability reform closer, but no guarantees

By AAOS Washington Staff

The 109th Congress will be very different from its predecessor, if for no other reason than the fact that it has an unprecedented number of physician members: 11 in the House and two in the Senate. Physician House members plan to form a “Doctors’ Caucus” to ensure physician representation in the policymaking process.

The new physician members include Rep. Tom Price, MD, (R-GA), the first orthopaedic surgeon to be elected to Congress; Rep. Charles Boustany, MD, (R-LA), a cardiothoracic surgeon; Rep. Joe Schwarz, MD, (R-MI), an otolaryngologist; and Sen. Tom Coburn, MD (R-OK), a family physician. As a member of the Senate Judiciary Committee, Sen. Coburn will preside over some important issues, including medical liability reform.

Medical liability reform

Even though President Bush has publicly placed medical liability reform at the top of his domestic policy agenda, bringing a bill to the Senate floor will not be easy. The Senate now has 55 Republicans, but not all support a cap on noneconomic damages.

AAOS is working with the Alliance for Specialty Medicine on materials to assist legislators in their discussions on this issue. If you have patient stories or state statistics on how the medical liability situation is affecting patient care in your area, please forward them to the AAOS Washington office at pontzer@aaos.org.

In the House, several legislators are jockeying to take the lead on introducing medical liability reform legislation. However, the House leadership is not expected to make any decisions until after a bicameral Republican retreat at the end of January. Senate leadership is not expected to implement a strategy for debate and votes until late February at the earliest. The two committees with jurisdiction—the Health Education Labor and Pensions (HELP) and the Judiciary Committee—are both chaired by supporters for reform: Sen. Mike Enzi (R-WY) on the HELP Committee and Sen. Arlen Specter (R-PA) on the Judiciary Committee. Sen. Judd Gregg (R-NH), who is the new chair of the Budget Committee, has indicated an interest in maintaining a leadership role in advocating for medical liability reform legislation.

Medicare reimbursement

Both legislators and staff on the Senate Finance Committee and the House Ways and Means and Energy and Commerce committees have been willing to work with the physician community to review the Medicare physician payment formula. However, the challenge for the 109th Congress will be how to increase physician payments when both Medicare and Medicaid cuts will likely be on the table.

The Medicare Payment Advisory Commission (MedPAC) recently recommended a 2.7 percent increase in physician payments for 2006. This figure is the result of projected changes in input prices less 0.8 percent. But Congress is not obligated to act on these recommendations, and under the current flawed Sustainable Growth Rate (SGR) formula, physician payment cuts are expected to average 5 percent over the next several years.

MedPAC also recommended that the Secretary of Health and Human Services (HHS) establish quality incentive payment policies for hospitals, physicians and home health. This could involve taking some percentage from the physician payment pool to give higher payments to those physicians who participate in a pay for performance program. Commissioners believe that a system tying payment to performance is inevitable, and Medicare planning should move in this direction, on a pilot basis if necessary. AAOS would like to see additional funding rather than a budget neutral redistribution of funds among physicians when implementing pay for performance measures.

Imaging services

Responding to the increasing volume of imaging services, MedPAC recently approved a set of recommendations to require mandatory accreditation of all facilities, including physician offices that operate imaging equipment, as well as credentialing of physicians who interpret these tests. With this proposal, MedPAC is breaking new ground in recommending that Medicare set standards for physicians, rather than relying on traditional structures of state licensure to determine physician qualifications. However, the final version eliminated language specifying whether the criteria should be based on training, education and experience.

AAOS and other medical specialty societies had urged MedPAC to consider legitimate reasons for growth in imaging services, including changing demographics of the Medicare beneficiary population, advances in imaging technology, cost-offsets to hospitals for doing more services in physician offices and migration to less-invasive diagnostic tools.

In response to the MedPAC recommendations, the American College of Radiology plans to go to Congress and press for legislation creating a federal privileging program for “designated physician imagers.” For orthopaedic surgeons, accrediting of equipment and facilities and credentialing of providers must differentiate between x-ray and MRI imaging services.

Physical therapy direct access

The MedPAC report on “the feasibility and advisability of allowing Medicare fee-for-service beneficiaries direct access to outpatient physical therapy services” was released on December 30, 2004 and recommended against eliminating the current referral requirement.

The AAOS has forwarded a summary of this recommendation to members of Congress and asked that they not cosponsor legislation to eliminate the referral requirement if it is reintroduced in the 109th Congress. The American Physical Therapy Association is encouraging its members to fight back by contacting their Representative and Senators to ask them to support elimination of the referral requirement. AAOS members can also be proactive; let your elected officials know that it is critical that physicians remain a part of the patient treatment process. You can find contact information for your Representative and Senators at http://www.house.gov and http://www.senate.gov

Specialty hospitals

The AAOS supports the development of specialty hospitals and encourages physicians and non-physicians to invest in the continued quality improvement of health care in their community. However, MedPAC has recommended to extend the moratorium on these hospitals until January 2007 so that the Secretary of HHS has time to study and compare the case mix of patients at specialty hospitals to community hospitals and to ultimately modify the diagnosis-related groups payment system to account for these differences. MedPAC also approved a recommendation requesting that Congress give the Secretary the authority to allow and regulate gainsharing arrangements between physicians and all types of hospitals.

The Orthopaedic PAC

The Orthopaedic PAC had an unprecedented fundraising and success rate in this 2003-2004 election cycle, receiving more than $1.8 million in contributions from 13 percent of the membership of AAOS.

Having reached this mark, the Orthopaedic PAC is well positioned to join the ranks of some of the larger and more effective PACs in Washington, D.C. With medical liability reform, a permanent Medicare payment solution and many other hot button healthcare issues still being debated before Congress, the PAC will be reaching for the $3 million mark in the 2005-2006 election cycle. For more information on the PAC, visit its Web site at www.aaos.org/pac

The AAOS Washington Office produces a biweekly electronic Legislative Update. To subscribe, go to: http://www3.aaos.org/Govern/Federal/Federaleg/LegUpdates.cfm (Password Protected)

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