November 21, 2005

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Action in Washington on Medicare Physician Fee Fix
During the last week several actions took place in Washington moving toward what is hoped to be a solution to the Medicare physician fee problem before the end of the year. Without final action, fees will be reduced by 4.4%. The Senate has approved legislation providing for a 1% positive update for one year but the House approved budget reconciliation bill, passed by a mere 2 votes last Thursday night, contains no language regarding Medicare. The two pieces of legislation must now be reconciled in a conference committee and the members of Congress on the conference committee have not yet been named. The AMA and many national medical specialty societies are lobbying strenuously for at least a two-year fix with positive updates each year equal to the Medical Cost Index (2.7% for '06).
In a related development, the House Energy and Commerce Committee last Thursday held a hearing entitled, "Medicare Physician Payment:  How to build a More Efficient Payment System."  Maine Congressman Thomas Allen is a member of the committee and attended the hearing.  Attending as a guest of the AMA and Congressman Allen was Jacob Gerritsen, M.D., President of MMA.

Testifying that a two-year fix will "help preserve access to health service for seniors and persons with disabilities while Congress and the Administration jointly work to enact a permanent fix to the current Medicare physician formula," AMA Board of Trustees Chair Duane Cady, M.D., also pointed out that, "only physicians...face updates of 7 percent below the annual increase in their practice costs."  Hospitals, long term care providers and Medicare Advantage Plans will all see market basket or greater increases in 2006.  A summary of Dr. Cady's comments are available at

With only 40 days until the 4.4% fee cut goes into effect, MMA, the AMA and many other physician organizations have intensified efforts to urge passage of a budget reconciliation bill containing a fix of the problem before Congress adjourns for the year.

Adding to the complexity of the issue is the administration's efforts to tie any resolution to the fee problem to a value-based purchasing initiative.  It is the position of the AMA that such a program is inconsistent with SGR  and that the formula must be repealed in order for any such plan to be successful.  But no one in Washington believes that time remains this year to repeal the formula , thus a one or two year temporary fix is being discussed.

At a fundraising event in Falmouth Saturday night (Nov. 19) hosted by over 50 Maine physicians, Maine Senator Olympia Snowe stated her support for eliminating SGR in favor of a permanent fix, but also discussed how difficult such an action would be given the existing climate in Washington and the cost of the fix in a time of deficit budgets.  She indicated that she would work toward a temporary fix so that a positive update could be available, with the fix being for a year or two years.

Report on MMA President's Trip to Capitol Hill Nov. 17, 2005
As President of the MMA and more importantly as a constituent of Congressman Tom Allen, who sits on the House Energy & Commerce Committee subcommittee on Health, I was invited by the AMA to come visit with the Congressman to discuss the SGR, the Physician Voluntary Reporting Program, and the Medicare physician reimbursement issues in general on Nov 17th, the day of hearings on these issues before the subcommittee.

I stressed with the Congressman the extreme urgency and late hour of the problem that in less than a month and a half these cuts are about to happen and the very real danger that the access to care for Medicare beneficiaries will be compromised.

Congressman Allen and his staff were extremely generous with their time and made me feel very welcome.

MMA physician leadership should know that Tom has a Senior Legislative assistant who specializes in health affairs, Susan Lexer, and with whom he works closely in preparation of his testimony and with whom we need to network as much as Tom himself.

It turns out that 3 weeks ago, during a hearing on Medicaid, Rep. Dingle (D-MI) brought up the SGR, which has nothing to do with Medicaid, and before the Chairman could rule him out of order they had a vote on Rep. Dingle’s amendment that would have increased Medicare reimbursement by 2.7%.

The amendment failed by a strict party line vote with all Republicans voting against and all Democrats voting in favor.

As a gesture to Rep. Dingle, they promised him the hearing I went to on the 17th to specifically discuss physician payment issues.  They had had no plan to have this hearing before that.

All members of the committee bemoaned the state of affairs and stated their horror at the prospect of physicians getting cut by 4.4% in 45 days, with the Democrats pointing in polite legalese that it’s what you vote for that counts, not what you say.

It should be noted that several of the Republican committee members are physicians themselves (Rep. Norwood and Burgess).  Several members of the committee, all Republicans, suggested balance billing be permitted as a way to offset payment cuts, which the Democrats pointed out is illegal at present.  There was a lot of interest in this being allowed at the recent AMA interim meeting this month.

Dr. McClellan gave his testimony and was chastised by the Democrats, especially the 2 California Representatives, for not coming up with a proposal to deal with the issue.

“That’s what Administrations normally do."  It is Dr McClellan's postion that taking drugs out of the formula, which has been urged by physician groups as a non-legislative way to decrease the size of the cut, would be illegal and at any rate still not provide for a positive update.  He testified that the pending cuts are the result of continuing rapid growth in volume and the cost of physician-related Part B services and that he supports moving to a performance-based payment system that does not add to overall Medicare costs.

His testimony is on-line here:

Also testifying was Mr. G. Hackbarth, who is the chairman of the Medicare Payment Advisory Commission.  He pointed out that Medpac has been advocating since 2002 that the SGR be eliminated as a volume control mechanism.  His basic approach is to differentiate among physicians and pay those who provide high quality services more and pay those who do not less. One of the major areas of growth in services compared to other services is in imaging with an ongoing migration of services from the hospital setting to physicians' offices.  He recommends requiring physicians meet quality standards as a condition for payment for in-office imaging procedures.

He also believes IT use should be encouraged and resource use be measured.

He stated his opinion that beneficiaries should be offered the option of private health plans.

His complete testimony can be found on the website.

Tom Allen in his testimony stated his position as favoring the proposed legislation to increase payment by 2.7 % (HR 2356) as well as the Johnson legislation (HR 3617) which would replace the SGR with a stable formula and also put in place a Pay -for-Performance program, sponsored by the American College of Physicians.

He noted that physician pay from Medicare in 2007 will be half of what it was in 1991.

In his questioning of Dr. McClellan he focused on the discrepancy between the generous subsidies given to nongovernmental Medicare Advantage plans (Medicare HMO’s), which don’t exist in Maine, and the continuous short shrift given to traditional Medicare settings.

Dr. Cady, Chair of the AMA Board of Trustees,  testified for the AMA after I had to leave.  A summary of his comments are here: [return to top]

Medical Care Development Receives Grant to Assist Physician Practices
Medical Care Development has received a grant award of $758,493 from the Physicians’ Foundation for Health Systems Excellence to assist Maine physician practices to improve systems of care for patients with chronic conditions.MCD will partner with five large Physician Hospital Organizations to work on improvement initiatives with member and non-member practices.These practices will select and test practice improvement strategies, share experiences, and assist one another with the process of improving care.MCD will provide technical support related to adoption of new programs and technology.The goal is to reduce redundancy in evaluation and testing of practice changes by sharing successful strategies for clinical office system improvement.The participating PHOs are the Maine Network for Health, the Maine Health Alliance, Central and Western Maine Regional PHO, Maine Medical Center PHO, and the Kennebec Region Health Alliance.

The project will be guided by a steering committee with representation from Quality Counts which includes the Maine Medical Association, Maine Osteopathic Association, the Maine Quality Forum, the Physician Hospital Organizations, payers, funders, and other Maine organizations concerned with practice quality and implementation of the Chronic Care Model.Physician practices that are not members of the five participating PHOs but have an interest in quality improvement are invited to apply for inclusion in this statewide initiative.Practices should contact Claudette Bean or Pam Hageny at Medical Care Development, 622-7566, regarding participation.

The Physicians’ Foundation for Health Systems Excellence was created for the sole purpose of helping practicing physicians improve the clinical care of their patients and is funded from a 2004 settlement in an antiracketeering class action lawsuit between physicians, medical societies, and Aetna, Inc.With assets of $98 million the Physicians’ Foundation devotes its resources to helping practicing physicians improve the care they deliver to their patients. The foundation provides grants to nonprofit organizations for practice-based, innovative projects that provide physician education or address quality of care or patient safety issues. [return to top]

MaineCare Now Processing Cross-over Payments on Paper
MaineCare is currently able to accept and pay claims for cross-overs for physician services that are billed on paper (CMS(HCFA)-1500).  The billing instructions are at:  (appendix A-page 40). MaineCare will be likewise announcing this via its usual MECMS communications channels [return to top]

Blue Ribbon Commission on MaineCare Meets; Hears MMA Testimony
MMA President-elect Kevin Flanigan, M.D. presented testimony before the Blue Ribbon Commission on the Future of MaineCare last Tuesday (Nov. 18).  Dr. Flanigan, a board certified pediatrician and internist spoke to the difficulty of treating MaineCare patients given the administrative burdens, the below-cost reimbursement and the MECMS claims management problem.  He presented Commission members with a detailed spreadsheet comparing MaineCare fees with fees paid by Medicare and commercial insurance companies.

Earlier in the day, the Commission heard from former Governor Angus King, who is serving as Vice-Chair of a federal Medicaid Commission that has been asked to find ways to make the program financially sustainable.  The federal Commission this summer presented Congress with recommendations to reduce Medicaid expenditures by $11 billion annually.  Some of those recommendations have found their way into the budget reconciliation bill currently pending before the Congress.

Governor King also pointed to the financial burden that nursing home care puts onto the program and spoke to the need for electronic medical records.  Earlier this Fall, MMA staff met with former Governor King to present the physician perspective on these issues.

The Commission also heard from the Maine Hospital Association which noted that the state currently owes Maine hospitals over $300 million and that the debt is threatening the ability of hospitals to fulfill their missions.  MHA stated that it was taking as long as three or four years to pay hospitals for treating MaineCare patients.  The full MHA testimony can be viewed at [return to top]

Upcoming County Medical Society Meetings in Androscoggin, Kennebec and Aroostook Counties
Three County Medical Societies are holding meetings or events in the next two weeks, as follows:

Androscoggin County Medical Society will hold its Annual Meeting on Thursday evening, Dec. 1 at the Hilton Garden Inn in Auburn.  Reception at 5:30pm, dinner at 6:30pm and at 7:30pm  Dr. Robert E. McAfee will speak on the topic of, "Can Healthcare be Insured - Is Dirigo the Answer?".  One credit hour of CME is offered. There is no charge for physicians in the county.  Guests are $25.00.  RSVP to Lisa Martin at MMA via phone 622-3374 or e-mail to

The Aroostook County Medical Society will meet at Slopes in Presque Isle on Wednesday evening, Nov. 30.  The purpose of the meeting is to review the mission and purpose of the society and its organization and funding. There will be no speaker so as to provide adequate time for business.  Gordon Smith, EVP at MMA will be a guest.  TO RSVP, call Carole St. Pierre-Engels at 540-1135 or via e-mail to

The Kennebec County Medical Society will meet at the Village Inn in Belgrade for a holiday event on Wednesday night, Dec. 6.  RSVP to Lisa Martin at MMA via phone at 622-3374 or via e-mail to [return to top]

Physicians' Costs Going Up Faster Than Revenues
American Medical News reported on Nov. 21 that two new reports released by the Medical Group Management Association (MGMA) found that physician costs are increasing faster than their revenue.  The MGMA 2005 Cost Survey Reports for Single-Specialty Practices found that total median revenue declined between 1% and 6% per full-time family and internal medicine physicians.  According to the study, one of the main reasons for the decline in physician profit margins is that their operating expenses, including staffing, medical and surgical supplies, technology and rent are continuing to rise while physician revenue growth remains nearly the same.  In addition, the study found that the discounts that health insurers demanded and received from physicians were greater, which took a toll on physician revenue.  A second study for multi-Specialty Practices found that median total operating costs grew 1.3% per full-time physician, while total revenue dropped 0.7%. [return to top]

Office of Health Policy and Finance Releases Draft State Health Plan
On Nov. 7, the Governor's Office of Health Policy and finance, joined by members of the Advisory Council on Health Systems Development, released the Draft 2006-2007 State Health Plan for public comment.   The draft plan and related materials can be read at

In the weeks ahead, the draft plan will be the subject of public hearings and review by the Legislature's Health and Human Services Committee.  The schedule of public hearings is set forth at the end of this article.

Page 6 of the draft lays out long term goals for access, affordability and quality and establishes explicit benchmarks to assure improved and integrated physical and mental health, specific reductions in substance abuse among high school students, reductions in tobacco use and reductions in unhealthy weight among adolescents and improved diabetes care.  The draft also calls for a sustainable public health infrastructure, a statewide system of comprehensive community coalitions and the establishment of a Rural Health Working Group and a Telehealth Workgroup.

The draft continues support for the Care Model to assure widespread implementation of the model in the state.

Much of the draft deals with the state's strict Certificate of Need Program with priority given to projects that protect public health and safety, contribute to lower costs, increase efficiencies, advance access to services and reflect a collaborative, evidence-based strategy for introducing new services and technologies.  Projects will be given higher priority if they include prevention and population health, promote investment in the MHINT project and cause less than a 0.5% increase in insurance premiums.

The draft also calls for an expansion of DirigoChoice by increasing enrollment of the uninsured by at least 100%.  But it also calls for an independent evaluation of Dirigo Health to identify key successes and areas for improvement.

Public comments will be received on the draft Plan by the Governor's Office of Health Policy and Finance until 5:00p.m., Friday, December 2,  2005.

The public hearing schedule is set forth below:

  • Lewiston, Nov. 21, 11:00a.m. to 2:00p.m., Lewiston/Auburn Campus of the University of Southern Maine, 51 Westminster St.
  • Brewer, Nov. 21, 4:00p.m. to 7:00p.m., Jeff's Catering, East West Industrial Park, 5 Coffin Ave.
  • Portland, Nov. 22, 11:00a.m. to 2:00p.m., University of Southern Maine's Portland Campus, Hannaford Hall in the Abramson Building.

The Maine Medical Association will testify at the hearing in Portland and offer written comments as well.  Watch for copies of the testimony in this publication. [return to top]

Maine's Youth Smoking Rates Drop
Survey results released by the Governor's office on November 15, 2005 demonstrate that from 1997 when the State initiated its tobacco prevention program to today, Maine reduced smoking by 64% among middle school students (from 21% to 7.5%) and by 59% among high school students (from 39.2% to 16.2%).  The high school smoking rate in Maine has gone from significantly above the national average to significantly below the national average of 21.7% in 2004.

The Maine Bureau of Health estimates that this decline means that there are now 26,031 fewer smokers in Maine and 14,317 young people will be saved from premature, smoking-related deaths.  Based upon estimates that smokers average $16,000 more in lifetime health care expenditures than non-smokers, the Bureau determined that this decline will save the state more than $416 million in long-term health care costs.

These results prove the value of investing the Fund for a Healthy Maine in tobacco cessation and prevention programs and of the work of the Maine Coalition on Smoking OR Health.  You can read Governor Baldacci's comments about the survey results on the web at: [return to top]

U.S. House Rejects DHHS Funding Bill
Last Thursday, November 17, 2005, House Republicans suffered a rare defeat as a conference report (H.R. 3010) including the 2006 appropriations for the Department of Health & Human Services failed by a vote of 209-224.  Democrats and moderate Republicans objected to the level of health care cuts in the bill.  It included $900 million in health care cuts - from the CDC, rural health outreach grants, health professional training programs, maternal & child block grants, state health planning grants, preventive health block grants, childhood immunization programs, and $8 billion in funding to prepare for a potentil avian flu pandemic.

The House leadership continues to work on a budget reconciliation bill (H.R. 4241) - trying to obtain the support of moderate Republicans.  The House reconciliation bill seeks nearly $11 billion in savings in the Medicaid program. [return to top]

Federal Court Upholds State PBM Disclosure Law
In a decision handed down on November 8, 2005, the federal Court of Appeals for the First Circuit unanimously upheld a decision by Maine's U.S. District Court Judge D. Brock Hornby that a Maine law regulating pharmacy benefit managers (PBMs) was not preempted by ERISA or in violation of the U.S. Constitution.  The case brought by a trade association for the PBMs is Pharmaceutical Care Management Association v. Rowe, 1st Cir., Civ. No. 05-1606, 11/8/05.

The 121st Maine Legislature enacted L.D. 554, An Act to Protect Against Unfair Prescription Drug Practices (P.L. 2003, Chapter 456; effective 9/13/03), one of the earliest state laws aimed at regulating the relationships between PBMs and pharmaceutical manufacturers.  The bill provide that PBMs have a fiduciary relationship with the health plan to which they provide drug management services and establishes standards that they must meet.

Of the ruling, Maine Attorney General G. Steven Rowe (D) said, "[o]nce again, the Maine Legislature's innovative work on behalf of prescription drug consumers has triumphed over industry challenges."  He continued, "As long as I hold this office, the Attorney General's Office will fight for affordable prescription drugs for Mainers in any court, for as long as it takes."  Former State Senator Sharon Treat (D-Kennebec), sponsor of the bill and now Executive Director of the National Legislative Association on Prescription Drug Prices said, "Now that the Federal Court of Appeals has clarified the law, I am sure that there will be numerous other states interested in joining these efforts."  PCMA President & CEO Mark Merritt said that his group would continue to fight state regulation of PBMs. [return to top]

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