January 5, 2004

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Revised 2004 Medicare Payment Rule to be Published Tomorrow
Deadline for physicians' decision to participate in Medicare is extended from 12/31/03 to 2/17/04.

In a memo to the AMA Board of Trustees dated 12/31/03, AMA EVP Michael D. Maves, M.D., M.B.A., stated that a revised final rule governing Medicare payments to physicians in 2004 became public at year's end.  The rule implements changes required under the Medicare Prescription Drug Improvement & Modernization Act and replaces a 4.5% payment cut with a 1.5% increase.  As a result, the 2004 conversion factor will rise from $35.13 under the prior rule to $37.34 in the new final rule - - an improvement of 6% - - with anesthesiology's separate conversion factor set at $17.50.

Also, in response to AMA requests and because of the "late timing of the change in payment rates," the deadline for physicians to modify their participating or nonparticipating agreements with Medicare is being extended from 12/31/03 to 2/17/04.

As required in the legislation, the rule also raises the geographic practice cost index for the work component of Medicare's relative value scale to 1.  This will bring additional payment increases to physicians in rural and other areas where this GPCI has been lower than the national average.  Another special provision will raise payments in Alaska by 52%.

In addition, the rule imposes significant Congressionally-mandated cuts in Medicare's reimbursement for physician-administered drugs.  Reduced drug payments are offset to some degree by increased payments for administering them.  For oncologists and hematologists, the rule projects that increased drug administration payments will completely offset losses from drug payment cuts in 2004.  However, other specialties such as rheumatology and urology will face losses of 2% to 4% and the financial picture for all affected specialties will worsen after 2004 when further drug price reductions are anticipated and a large "transitional" add-on of 32% drops to 3% in 2005 and then disappears entirely in 2006.

The law permits additional increases in drug administration payments after 2004 and the AMA plans to work with the Administration and Congress if necessary to ensure that total payments for these services are adequate.

The rule, Changes to Medicare Payment for Drugs and Physician Fee Schedule Payments for Calendar Year 2004, is scheduled to appear in the January 6th Federal Register.  You can find the Federal Register at the following U.S. Government web site, http://www.access.gpo.gov/su_docs/fedreg/frcont04.html.

CMS estimated that the combined effect of the fee schedule and the GPCI provisions will increase Medicare spending by $1 billion in 2004 - - $200 million for the geographic adjustment and $800 million for the other fee updates.

Opportunities for Comment on Proposed Medicaid Budget Cuts
As previously reported in the Maine Medicine Weekly Update, the Baldacci Administration is proposing a series of initiatives designed to achieve approximately $7.5 million in savings in the Medicaid budget in FY 2004.  The savings will come from reductions in services or reimbursement, not from changes in eligibility for the program. 

Because Baldacci Administration officials are appropriately concerned about continued access to physician services, they have avoided proposing direct reductions in physician reimbursement.  Still, MMA has concerns about all of the proposed cuts in health care and mental health care services and have heard from physicians about the restrictions on certain elective surgeries and cuts for Rural Health Clinics and Federally-Qualified Health Centers in particular.

Physicians have opportunities in the next two weeks to express their views on the proposals.  First, the Department of Human Services, Bureau of Medical Services must promulgate emergency rules to carry out these cuts.  As part of the rulemaking process, the Bureau will hold a public hearing beginning at 8:30 a.m. on Thursday, January 8, 2004 at the BMS Office, 442 Civic Center Drive, Augusta, Maine.

A summary of the hearing agenda follows:

8:30 - 9:00  General comments

9:00 - 10:30  Acute & preventive care & related services*

10:30 - 12:00  Pharmacy & DME

1:00 - 2:30  Behavioral health services

2:30 - 3:30  Children's services

3:30 - 4:30  Long-term care

4:30 - 5:00  General comments

*MMA has heard the most from physicians about the proposals in this category:  elimination of certain reimbursement enhancements for FQHCs & RHCs, discontinued coverage of certain elective surgeries such as gastric bypass, newborn circumcision, & rhinoplasty, & limits on hospital discharges & outpatient visits.

You may view the detailed agenda at the BMS web site, http://www.state.me.us/bms/rulemaking/budget_initiatives.pdf.

If you do not wish to attend the hearing, but would like to submit written comments, you have two options.  You can send your comments to Gordon Smith, gsmith@mainemed.com, or Andrew MacLean, amaclean@mainemed.com, for inclusion in the MMA's comments.  Or, you may send your comments directly to Marianne Ringel, Bureau of Medical Services, State House Station 11, Augusta, Maine 04333-0011.  The written comment deadline is January 12, 2004.

The second opportunity for comment will come at joint public hearings held by the Legislature's Appropriations & HHS Committees on January 14, 15, & 16, 2004 in Room 228 (the Appropriations Committee room) at the State House.  MMA will alert you to the agenda for these 3 days when it becomes available. [return to top]

MHA Presents to Commission to Study Maine's Hospitals
This morning, the Maine Hospital Association addressed the Commission to Study Maine's Hospitals on 4 topics:

  • Provide an overview of hospitals in Maine
  • Present an analysis of hospital cost and utilization measures
  • Provide an overview of the role of Maine hospitals in the healthcare delivery system
  • Identify challenges, recent accomplishments and future goals

The MHA's Mary Mayhew and David Winslow responded to probing questions by Chairman Bill Haggett and others about the financial status of Maine's hospitals and Maine hospital costs compared with other states, in particular.

The following are some of the more interesting points from the presentation & discussion:

  • Total Net Patient Service Revenue for Maine hospitals in 2001 was $1,918,477,086; the 10 highest revenue hospitals represent approximately 70% of the total and the 10 lowest revenue hospitals represent 6.46% of the total
  • Hospital budgets generally break down as follows:  52%, wages & benefits; 17%, supplies including drugs & medical supplies; 5%, bad debt; 5%, depreciation; 1%, interest; 20%, all other including insurance, utilities, & contracted services
  • Maine hospitals are, on average, paid 88% (1999) of actual cost to treat Medicare patients (46th nationally according to a national study)
  • Maine hospitals are, on average, paid approximately 79% (2000) of the cost for treating Medicaid patients - MHA is recalculating this figure based upon $58 million in hospital cuts in the 2004-2005 biennial budget
  • Maine hospitals' (2002) operating margin was 1.10% & total margin was 0.64%
  • Maine hospitals own more than 130 primary care practices & employ 1300 physicians

Following the MHA presentation, GOHPF Director Trish Riley presented a proposed agenda for future meetings extending into the spring.  The agenda includes data gathering from meetings with stakeholders including the following:

  • business & public payers for health care services
  • a federal government perspective
  • consumers, non-medical hospital employees, & government employees
  • physicians & nurses
  • David Wennberg, M.D.
  • a joint meeting with the Advisory Council on Health Systems Development
  • insurers
  • national experts on the future role of hospitals in our health care system

The group would then consider tools available to "incentivize or regulate to promote change."  The group will schedule meetings for committee reflection & discussion & for public comment this summer. [return to top]

Dirigo Board Hires Tom Dunn as Executive Director
At today's regular monthly board meeting, the Dirigo Board announced the hiring of Tom Dunn as the new Executive Director for Dirigo Health.  He has been acting director for the past few months. 

The Board heard a presentation from Bob McArtor, MD, who chairs the Maine Quality Forum.  The forum has been charged with the difficult task of determining performance measures and indicators of quality as well as conducting a technology assessment for use during the CON process.  The forum will be hiring its own executive director within the month.

Trish Riley updated the board on a number of issues.  She announced that Adam Thompson was back on staff and will be doing outreach, acting as a legislative liaison, covering media issues and Dirigo constituencies.  He will be the "go-to" guy for all Dirigo committee information.  She also announced that they have chosen a marketing company and will soon be producing a brochure to be circulated amongst small businesses.  Trish acknowledged the recent budget crisis but assured the Board that the $53 million budgeted for the start-up of Dirigo is secure.

The Board's next meeting will be January 26 at 1 pm.  They expect to make some conclusions at this meeting regarding the make-up of the final Dirigo insurance product so that the RFP process can go forward.  On February 1, the Legislature is expecting recommendations from them regarding the methods for determining the Savings Offset Payments. [return to top]

121st Legislature Commences Second Regular Session
The 121st Maine Legislature will begin its Second Regular Session this Wednesday, January 7th & is expected to finish its work by late March or early April.  The MMA's legislative advocacy team will be at the State House every day to represent the interests of Maine physicians.  The MMA Legislative Committee will meet on Tuesday, January 13th at 6 p.m. at the MMA office.  The weekly legislative update, Political Pulse, will begin second session publication on Friday, January 16th. 

You can become involved in the MMA's legislative advocacy in a number of ways -  by signing up for the Political Pulse & responding to its legislative alerts, by participating in the "Doctor for the Day" program, or by joining the Legislative Committee conference calls.  If you would like more information about this aspect of the MMA's work, please contact Andrew MacLean at amaclean@mainemed.com. [return to top]

REMINDER: Medical Record Copy Charge Limits Now in Effect
The MMA has received a number of recent inquiries from practices about new limits on charges for medical records.  As MMA previously has reported, L.D. 363, An Act to Ensure Patient Access to Medical Records (P.L. 2003, Chapter 418) limits the charge for copies of medical records to $10 for the first page and $0.35 for each additional page.  The bill, submitted on behalf of the Maine Trial Lawyers Association, passed despite opposition from the MMA & the MHA.  The bill is based upon the Maine Workers' Compensation fee schedule but now applies across-the-board to all medical record requests.  MMA has been presented with two questions that, to the best of our recollection, did not arise during the discussion of the bill.  First, can a practice add the cost of postage?  MMA believes this is reasonable.  Second, does this apply to copies of film?  MMA believes the intent of the bill was to apply to the photocopying of paper.  Just make sure that your charges for reproducing films are reasonably related to your costs.  If physicians feel that this needs to be clarified, the MMA's Legislative Committee will consider that for a future legislative agenda. [return to top]

For more information or to contact us directly, please visit www.mainemed.com l ©2003, Maine Medical Association