December 11, 2006

Subscribe to Maine Medicine eNewsletters
Manage Your Subscriptions
Email our Editor...
Maine Medical Association Home Page
. Search back issues
. Plain Text Version
Printer Friendly

Congress Adjourns After Taking Action To Avert Medicare Physician Payment Reduction

At approximately 4:40am last Saturday night, the United State's Senate enacted the "Tax Relief and Health Care Act of 2006" thus effectively ending for this year what has become a yearly advocacy effort by MMA, the AMA and virtually all other medical societies in the country to prevent reductions in Medicare reimbursement to physicians necessitated by the so-called "Sustainable Growth Rate" formula.  A reduction of 5% was to take effect on Jan. 1, 2007.  The new law prevents that cut by freezing the Medicare converson factor at the 2006 level.  For details on the voluntary quality reporting program, to take effect July 1, 2007 and the extension of the work expense GPCI (good for Maine), read the article which follows.

The Quality Reporting Program begins on July 1, 2007 and offers physicians an additional 1.5% update if they participate.  Of the quality measures required to be reported, nearly 90 percent have been developed by the AMA Consortium for Performance Improvement, which includes all the major national medical specialty societies.

The current provision establishing a 1.0 floor on the geographical index of the work expense portion of the Sustainable Growth Rate (SGR) has been continued in the new law for another year.  It had originally been scheduled to sunset at the end of 2006.  This extension is very important to Maine physicians, most of whom would have received an additional reduction in reimbursement if the floor had not been extended.  In 2007, the "Southern Maine" (Cumberland and York counties) would have been cut an additional 1.06% and the remainder fo the state an additional 2.13% due to expiration of the temporary GPCI  increase which had been included in the Medicare law changes n 2003.

Without this action over the weekend, Maine physicians would have lost  $14 million in Medicare reimbursement due to the negative update in 2007.  Compared to the rest of the country, Maine, at 17%, has an above average proportion of Medicare patients, and at 17 physicians per 1,000 beneficiaries, a below average ratio of physicians to Medicare beneficiaries.

Senators Snowe and Collins and Congressmen Allen and Michaud were very helpful in accomplishing this action.  MMA officers and staff have met with the delegation throughout 2006 to advocate for the restoration of the cut and further to argue for a positive update of at least 2.4 % which was recommended by the influential Medicare Payment Advisory Commission.

What follows below is the AMA's preliminary analysis of the provisions in the bill.  In some cases, it will take a few more details and discussion to know exactly what the impact may be.

Overview of Key Medicare Physician Provisions under H.R. 6111, the “Tax Relief and Health Care Act of 2006”

SGR/Medicare Physician Payment Update:
Prevents a 5% cut in 2007 Medicare physician
payment rates due to the SGR by freezing the Medicare conversion factor at its 2006 level.

Unlike the DRA and MMA (which also averted scheduled Medicare physician cuts), this
provision does not add more years of pay cuts to the 9 years already forecast (for 2007 through
2015) because the freeze is fully funded for 2007 using the Medicare Stabilization Fund created
to fund Medicare Advantage plans. At the same time, the legislation does not change base
payment rates beyond 2007 and, therefore, physicians potentially face a cut of more than 5% in
The Secretary of HHS is allocated $1.35 billion to use for physicians’ services in 2008, including
helping to avert the 2008 cut, but this provision allows the Secretary broad discretion in
determining how to use the $1.35 billion. As the SGR cut was the single biggest factor in the
steep cuts physicians face in 2007, the percentage of physicians facing cuts of 6-20% will be
reduced from 44% with the SGR cut to 14% with a freeze.

The work GPCI floor is extended for one year, averting pay cuts in 53 states and
localities where the geographic adjustments were set to expire.
Physicians in a number of
states would have faced average payment cuts of 7-10% due to the combined effects of the GPCI
and SGR cuts.

New Physician Quality Reporting Program
Medicare Physician Quality Reporting Program for 2007:
Establishes a Medicare physician
quality reporting program using PVRP quality measures for July 1, 2007 through December 31,
2007. Of the 66 PVRP measures now in effect, 56 were developed by the Physician Consortium
for Performance Improvement. There is some ambiguity in the bill language regarding additional
measures that would be eligible for inclusion in the PVRP for 2007, such as those that may be
completed in early 2007, and we are seeking clarification. If these additional measures are
permitted as part of the PVRP, more physicians would be eligible to participate in the program.
A bonus payment of 1.5% will be paid to physicians who report on at least three PVRP measures.
It is unclear at this time whether the 1.5% bonus will be paid for all claims submitted by the
reporting physician or only with respect to those claims for which data has been reported (during
the July 1 through December 31, 2007 time period). Nevertheless, the payment methodology is
subject to certain limits and may not offset physicians’ administrative reporting costs. The
physician community will need to work with the 110th Congress to improve this quality reporting

Medicare Physician Quality Reporting Program for 2008: Establishes a Medicare reporting
program for 2008 under which physicians would report with respect to quality or structural
measures, including those related to use of HIT. The measures must have been adopted or
endorsed by the National Quality Forum or the AQA and developed in a consensus-based
process, but the bill does not specify that the measures must be developed through the Physician
Consortium for Performance Improvement. Physicians can also use an appropriate medical
registry, such as the Society of Thoracic Surgeons National Database, to provide data on quality
Physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse
anesthetists, clinical social workers, clinical psychologists, registered dietitians and nutrition
professionals may also participate in the reporting program.

Quality Reporting for Hospital Outpatient Services and Ambulatory Surgical Centers: Requires a
quality reporting program for hospital outpatient departments and ASCs for implementation no
sooner than 2009, with a 2% cut in their payment update for non-compliance with reporting

Pathology Services: Extends for one year direct payments for the technical component of
pathology services by independent labs.

Medical Home Demonstration: Establishes a three-year, 8-state demonstration under which care
management fees would be paid to physicians who treat patients with one or more chronic or
prolonged illnesses.

Therapy Caps: Provides a one-year extension of the exception process allowing the therapy caps
be to exceeded for certain patients.

Payment for Administration of Part D Vaccines:
The administration fee for Part D vaccines
would be covered by Part B in 2007. Currently, Medicare does not cover these costs at all. In
2008 and beyond, the administration fee would be paid by the same Part D plan that pays for the
vaccine itself.

Offsetting Adjustments in Medicare Advantage Stabilization Fund: Reduces the Medicare
Advantage Regional Stabilization Fund from $10 billion to $3.5 billion to partially offset the
health provisions in the legislation. The stabilization funds would not be available for
expenditure until January 1, 2012 instead of January 1, 2007, as currently provided by statute.

Extension and Expansion of Recovery Audit Contractor Program: Extends the RAC program to
all states by January 1, 2010, with audits to be conducted retrospectively for up to four years.
This provision also directs RAC compensation to come from overpayment recoveries, but leaves
it to the Secretary’s discretion whether RACs would be compensated for identifying

Health Savings Accounts: Allows a one-time distribution from Flexible Spending Accounts
(FSA), Health Reimbursement Arrangements (HRA), and Individual Retirement Accounts to
Health Savings Accounts (HSA), with certain restrictions. In addition, the legislation expands the
contribution limitation for part-year coverage, does not require employers to make comparable
HSA contributions for highly-compensated employees, and limits the allowable annual deduction
for individuals participating in HSA/HDHP to $2,250 for self-only coverage and $4,500 for
family coverage.

Medicaid Provider Taxes
The bill constrains the Administration’s ability to reduce Medicaid provider taxes through 2011,
and if the upper limit on provider taxes had been reduced, this would have put pressure state budgets. States may have responded by reducing Medicaid physician payment rates to offset lower provider taxes.

Prepared by the American Medical Association
Department of Government Affairs, Dec. 8, 2006 



Payor Liaison Committee Briefed on State Employee Health Plan Tiering Initiatives

At its regular meeting on Thursday, November 30, 2006, the MMA Payor Liaison Committee met with Frank Johnson, Executive Director of the Maine State Employees Health Insurance Program, to hear an update on the Program's tiering initiatives announced during a previous meeting.  Mr. Johnson discussed two phases each of hospital and physician tiering initiatives.

1.  Hospital Tiering Phase I

  • MSEHIP introduced a tiered hospital benefit effective 7/1/06;
  • Services billed by the hospital are exempt from the deductible if the member obtains care from a "preferred" hospital;
  • Criteria for determining a "preferred" hospital are completion of the 2005 Leapfrog safe practices survey, score of "1/2 pie" or greater on the 2005 Maine Health Management Coalition medication safety survey, and met or exceeded national performance on CMS clinical measures.
  • 14 hospitals made the preferred list;
  • Effective 1/1/07, the criteria will be updated to include completion of the 2006 Leapfrog safe practices survey, aggregate score of "1/2 pie" or greater on the 2006 MHMC medication safety survey, and met or exceeded the national performance on CMS clinical measures.
  • The preferred list is expected to increase to between 24 and 28 hospitals.

2.  Hospital Tiering Phase II

  • Effective 7/1/07, the standards will be raised slightly to be consistent with the Pathways to Excellence (PTE) Hospital measures.  For example, merely completing the Leapfrog survey will be replaced by the requirement that the hospital achieve an aggregate "3/4 pie" on the combined Leapfrog and MHMC medication surveys.

Through the hospital tiering the MSEHIP hopes to achieve 2 objectives:
  • To engage members in a discussion on health care quality:  that it varies, that it matters and that it can be improved - to get them thinking about quality and comparative provider performance;
  • To use market leverage to encourage providers to publicly disclose their performance.

3.  Physician Tiering Phase I

  • MSEHIP has voted to introduce a tiered benefit design for primary care practices effective 7/1/07 and has expressed the intent to implement a tiered benefit for selected specialties effective 7/1/08;
  • RFP will be released soon seeking a TPA able to administer a tiered PCP benefit design predicated on the MHMC's PTE measures;
  • 2 & 3 Blue Ribbon practices as defined by PTE will be "preferred" practices;
  • Likely to introduce a fairly benign incentive - waiving the office visit copay;
  • Plan hopes to close the geographic gaps in higher performing practices.

4.  Physician Tiering Phase II

  • Developing a strategy for a tiered specialty benefit or network has been hampered by the absence of uniform performance measures.  MSEHIP recently has joined Care Focus Purchasing as a means to stimulate activity in this area.  The development of specialty projects within the PTE framework will continue to be a preference.  The MSEHIP is very sensitive that any initial tiering proposals must be structured with quality and safety as the primary criteria.  Efficiency is viewed as an important adjunct to, but not a substitute for, quality.
In a discussion led by Committee Chair Tom Hayward, M.D., a primary care physician practicing in East Corinth, the group explored the issues with all current quality measurement and pay-for-performance programs, particularly resource issues for smaller, rural practices.  Members acknowledged the potential for "dumping" of patients who prove difficult to manage in a P4P environment and for physicians in physician shortage areas to dismiss P4P initiatives because they do not see any real risk in initiatives to steer patients to other physicians.  The group gave Mr. Johnson high marks for his low key, straight forward presentation and for the MSEHIP's thoughtful approach to this new initiative. 

The Committee plans to meet next on Thursday, January 18, 2007 with Peter Hayes of Hannaford Brothers.  For more information about the work of the Payor Liaison Committee, please contact Gordon Smith, EVP, at
[return to top]

In the States: Massachusetts

The Massachusetts Medical Society (MMS) has released a report reviewing the Massachusetts GroupS Insurance Commission's (GIC) physician profiling and tiering system and making suggestions for improving that system. Among the panel’s recommendations: tiering physicians by group instead of individually until program methodology can be validated; establishing a formal feedback and correction system; and providing physicians with specific action items that can improve their results. The executive director of GIC has stated opposition to some items in the report, but could act on a number of other recommendations this year. For more information:
A PDF copy of the MMS report can be downloaded at:
[return to top]

Update on MaineCare MECMS Performance

The Governor's MaineCare Providers' Advisory Group met on Dec. 7 and heard a series of reports from MaineCare staff on the performance of the claims management system (MECMS).  On the positive side, the weekly metrics for the week ending Dec. 3, 2006 showed that total fresh claims were processed at a rate of 92%.  Even factoring in the recycled claims, over 90% of total claims were processed through the system, with 13.13% being denied.  Total suspended claims stand at 78,913, the lowest number since the problem arose in January, 2005.

On the down side, the fixes are going slow with the highest priority being given to void functionality.  Several manual workarounds have been developed to correct the problem with the modifiers on anesthesia claims and a meeting was held with representatives of anesthesia providers met with MaineCare last week.

Because of the delay following the failure of July 1 "Release", there is currently no scheduled date for when the program will be able to electronically process the Part B crossover claims.

MaineCare Director Michael Hall provided a report on the status of the so-called IV&V (Independent Valuation and Validation) process, which is being conducted on an ongoing basis by First Data Government Solutions.  The company has a three member team on site to prepare an independent report on how the system is operating.  This process is required by the federal government for any project of this type.  Once the report is completed and shared with the appropriate legislative committees, MMA will review it and inform members through the pages of this newsletter on its contents.

The Advisory Group will meet next on December 21, 2006 at 10:00am at the MaineCare office in Augusta. [return to top]

Senate Confirms Von Eschenbach as FDA Commissioner

On Thursday, December 7, 2006, the U.S. Senate voted 80 to 11 to confirm Andrew von Eschenbach, M.D. as Commissioner of the Food & Drug Administration.  Dr. von Eschenbach, a surgeon, has been Acting FDA Commissioner since September 2005 and previously served as director of the National Cancer Institute.  While Dr. von Eschenbach's nomination has been embroiled in the controversy surrounding the agency's decisions on the emergency contraceptive Plan B and drug safety issues, he has broad bipartisan support in Congress and is considered to have strong credentials for the job.  [return to top]

DHHS Behavioral Health Managed Care Initiative Remains in Development

The MaineCare Advisory Committee, of which the MMA is a member, has been briefed in November and December about the status of the DHHS behavioral health managed care initiative.  The 122nd Maine Legislature directed DHHS to pursue this initiative in the so-called "Part III" biennial budget bill (L.D. 1691, P.L. 2005, Chapter 457) that became effective September 17, 2005.  The legislature originally expected the initiative to achieve $10.4 million in savings in the second year of the biennium ending June 30, 2007.  The Department clearly will not make this goal and the Administration likely will address this in a supplemental budget in January 2007.

An RFP for the initiative is on hold awaiting Commissioner Harvey's decision to proceed.  Mercer and Beacon Health Strategies are consultants to the State on the project.  You can find more information on the DHHS web site at: [return to top]

Federal Medicaid Commission Makes Long Term Program Recommendations

Following a two-day meeting in mid-November, the federal Medicaid Commission has made a series of recommendations to improve the future stability and financial sustainability of the program.  The Commission made recommendations in the following areas:

1.  Long-Term Care

  • Public policy should promote individual responsibility and planning for long-term care needs.
  • Changes in Medicaid long-term care policy should address institutional bias and reflect what most seniors and persons with disabilities say they want and need, which is to stay at home in their communities in the least restrictive or most integrated setting appropriate to their long-term care needs in a place they call home.

2.  Benefit Design

  • States should be given greater flexibility to design Medicaid benefit packages to meet the needs of covered populations.  This flexibility should include the authority to establish separate eligibility criteria for acute and preventive medical care services and for long-term care services and supports and the flexibility with benefit design to allow states the option to offer premium assistance to allow buy-in to job-based coverage or to purchase other private insurance.
  • Federal Medicaid policy should promote partnerships between states and beneficiaries that emphasize beneficiary rights and responsibilities and reward beneficiaries who make prudent purchasing, resource-utilization, and lifestyle decisions.
  • States should have the flexibility to replicate demonstrations that have operated successfully for at least two years in other states, using an abbreviated waiver application process.  Waiver applications to replicate such demonstration programs should be automatically approved 90 days after the date of application unless the application does not meet the replication criteria.
  • Compliance with existing regulations regarding the public notice and comment period about state proposals that would significantly restructure Medicaid (section 1115 waivers and state plan amendments) should be monitored and enforced.

3.  Eligibility

  • Medicaid eligibility should be simplified by permitting states to consolidate and/or redefine eligibility categories without a waiver, provided it is cost-neutral to the federal government.
  • The federal government should provide new options for the uninsured to obtain private health insurance through refundable tax credits or other targeted subsidies so they do not default into Medicaid.
  • Medicaid's core purpose is to serve needy low-income individuals, especially the most vulnerable populations.  Therefore, the Commission recommends a study of a new "scaled match" funding formula in which the federal government would reimburse states at an enhanced matching rate for adding lower-income populations to the program, with the match rate scaling back as they expand Medicaid to higher-income populations.  Cost neutrality should be considered.

4.  Health Information Technology

  • The Commission wants to emphasize the importance of investments in health information technology.  The Commission, therefore, recommends that the budget scoring process utilized by the Congress amortize the cost of investments in health information technology over a period of five years, while also accounting for the long-term savings.
  • DHHS should continue to aggressively promote and support the implementation of health information technology through policy and financing initiatives while ensuring interoperability.
  • All Medicaid beneficiaries should have an EHR by 2012.
  • State Medicaid agencies should include in contracts or agreements with health care providers, health plans, or health insurance issuers that as each provider, plan, or issuer implements, acquires, or upgrades health information technology systems, it shall adopt, where available, health information technology systems and products that meet recognized interoperability standards.
  • DHHS, state Medicaid agencies, and their vendors shall assure that health information technologies that are acquired or upgraded continuously meet federal and state accessibility requirements.

5.  Quality & Care Coordination

  • States should place all categories of Medicaid beneficiaries in a coordinated system of care premised on a medical home for each beneficiary, without needing to seek a waiver or any other form of federal approval. 
  • The Commission recommends a series of reform proposals to support the development and expansion of integrated care programs that would promote the development of a medical home and care coordination, while also providing necessary safeguards, for dual eligibles.
  • CMS and Congress should support state innovation to deliver value for taxpayer dollars by purchasing quality health care outcomes as opposed to simply reimbursing for health care processes.
  • CMS should establish a National Health Care Innovations Program to support the implementation of state-led, system-wide demonstrations in health care reform and make data design specifications available to all other states for possible adoption.
  • State Medicaid agencies shall make available to beneficiaries the payments they make to contracted providers for common inpatient, outpatient, and physician services.
  • In order to pay for quality, states must first be able to measure it.  Therefore, states should collect and mine data on how Medicaid money is being spent to determine which programs, providers, and services are effective and which need improvement.  Payments to Medicaid providers then should be tied to objective measures of risk- and case-adjusted medical outcomes.  This will lead Medicaid to become more patient focused. 

The Commission's chairs are two former governors - Donald Sundquist of Tennessee and Angus King of Maine.  The recommendations immediately drew criticism from groups representing minorities and the disabled and given the change in control of Congress, it remains to be seen how much influence these recommendations have. [return to top]

Schedule of 2007 First Friday Series of Educational Programs Announced
Mark your calendars!




February 2, 2007 

Collections Seminar     

Vaughan Clark 

March 2, 2007 

Annual HIPAA Training 

Gordon Smith, Esq.

Andrew MacLean, Esq. 

April 6, 2007 

Risk Management 

Cheryl Peaslee 

May 4, 2007 

Physicians Guide to Maine Law 

Gordon Smith, Esq.

Andrew MacLean, Esq. 

June 1, 2007 

"Jazzing Up Your Coding Skills" 

Jana Purrell, CPC 

September 7, 2007 

Collaboration Skills for Healthcare Professionals 

Beth Boynton 

October 5, 2007 

Using Data to Improve Quality and Public Reporting 

Maine Health Information Center   Maine Quality Forum                     Maine Health Data Organization  Maine Health Management Coalition

November 2, 2007 

Family Planning Association of Maine 

Cheryl Daggett 

December 7, 2007 

Best of Physician Practice Seminar 


[return to top]

December Members-only Poll Question Posted on Web Site

We want MMA member opinions on topics of interest to the practice of medicine, and therefore post a new members-only poll question on the home page (directly under the Calendar of Events) on our web site, the first day of each month.

The poll question for December is:  The Board of Licensure in Medicine is considering a proposal to require the fingerprinting of new physician applicants for licensure.  Would you support such a process?

Please take a moment to visit and place your vote today.  The questions are for members-only, so you will need to enter your username and password and then it is as easy as toggling on a button indicating your choice and pressing submit.  If you haven't registered as a member, you can do so easily by clicking on "REGISTER" in the upper right hand corner of the home page under MMA Member Access.

We want your opinion, so please take time to vote today! [return to top]

The Coding Center's Coding Tip of the Week

Diagnosis Coding
  • DO NOT list “rule out, suspect, possible or questionable” conditions as the diagnosis on your encounter forms.  These descriptions can not be coded.
    • Example:  A patient comes into the office complaining of vomiting.  The physician suspects food poisoning and orders several lab tests
  • Since there is no definitive diagnosis at this visit, the correct code assignment would be for the sign or symptom (vomiting—787.03) rather than the suspected condition of food poisoning
Questions? Call the Coding Center: 1-888-889-6597.
[return to top]

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