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Washington -- In the closing days of the 2007 session, Congress prevented a Medicare payment cut and kept the State Children's Health Insurance Program alive, but both moves are only temporary.

By unanimous consent on Dec. 18, 2007, the Senate passed the Medicare, Medicaid and SCHIP Extension Act of 2007. The House passed the same legislation 411-3 the next day, and a White House official indicated President Bush would sign the measure.

Instead of facing a 10.1% across-the-board cut in Medicare reimbursement beginning Jan. 1, physicians were given a 0.5% increase. But the boost expires June 30, meaning that the reduction will go into effect in July unless lawmakers approve another bill that would continue to stave it off. Without such a move, the Medicare payment formula would act as if the boost had never happened, and rates as of July 1 would be 10.1% lower than in 2007. The bill also extends payment provisions for rural physicians.

In light of the action, the Centers for Medicare & Medicaid Services extended the deadline for changing Medicare participation status to Feb. 15.

While physician organizations said the half-percent increase is better than a double-digit percentage cut, they are still disappointed that Congress was unable to enact a longer-term Medicare solution. The AMA and other groups were pushing for two years of increases that would reflect the rise in the annual cost of providing medical care.

AMA Board of Trustees Chair Edward L. Langston, MD, said it was extremely disappointing that months of work in the House this year produced only a six-month reprieve. The short-term nature of the bill "creates uncertainty for both Medicare patients and physicians."

"We strongly urge Congress to break the tradition of short-term interventions that are not funded and fail to chart a course for replacing a flawed payment formula that is a barrier to improving quality and access to care for seniors," he added.

The six-month postponement of the cut means physician organizations need to keep pressuring lawmakers to act as soon as the new session starts, said James King, MD, president of the American Academy of Family Physicians. "Yes, they've stopped the hemorrhaging that would have occurred, but we still have the problem of trying to get right back to work with Congress in the first of the year."

The AARP described the measure as "woefully inadequate."

"Enactment of this legislation does little to protect millions of Medicare beneficiaries from higher monthly premiums and only temporarily averts the problems beneficiaries would face finding a physician if payment cuts take place," said David Sloane, AARP director of government relations.

The entire package was expected to cost about $6 billion, according to the Senate Finance Committee. The six-month reprieve for doctors alone would cost $1.4 billion over five years, estimates the Congressional Budget Office. The cost was offset by cuts to a special stabilization fund for Medicare Advantage plans.

Lawmakers tried to craft a pay raise that would go beyond six months, but disagreements between the parties and the White House prompted leaders to pursue a bare-bones approach that could pass both houses and obtain the president's signature.

Senate Democrats, for instance, were pushing for a two-year update that would have paid for annual pay increases by equalizing per-capita pay between traditional Medicare and Medicare Advantage -- a move supported by the AMA and AARP. But Senate Republicans threatened to block the measure, and President Bush threatened to veto any bill that cut Medicare pay to private plans.

In August 2007 the House approved a two-year Medicare payment update as part of a massive Medicare and SCHIP package, but congressional negotiators deleted Medicare language before passing the bill. Bush vetoed the resulting SCHIP expansion measure.

Party differences on SCHIP remain

The newly passed 18-month SCHIP extension takes the issue off the legislative front burner for 2008.

Drs. Langston and King said they appreciate the action. "The renewal of SCHIP is a true gift to families in need," Dr. Langston said.

The legislation would maintain the current enrollment of roughly 6 million by adding $800 million to the existing annual SCHIP funding of $5 billion. Without that extra funding, at least 19 states would have faced program shortfalls in 2008, according to the Congressional Budget Office.

While the extension sets the stage for efforts in 2009 to expand SCHIP, passage doesn't resolve the party differences that kept Democrats from having their version of a five-year program reauthorization adopted. They championed a $60 billion renewal, funded in part by a 61-cent federal cigarette tax increase. It would have expanded SCHIP enrollment by 4 million to reach 10 million. Bush vetoed two similar versions of the bill.

The president and some other Republicans want an SCHIP reauthorization that immediately keeps the program from covering any adults and from covering children in families earning more than 250% of the federal poverty level. They also favor tough enforcement to keep illegal immigrants from enrolling and oppose funding via a tax increase. About 600,000 adults are enrolled in SCHIP.

The passed legislation meets some of their criteria. It does not override an August 2007 Centers for Medicare & Medicaid Services rule limiting SCHIP enrollment to families earning 250% of the federal poverty level. States can exceed that threshold only if the program covers 95% of children in families earning 200% or less of the poverty level, among other requirements. Five states have filed lawsuits against CMS to block the regulation, saying the agency didn't use the proper public comment process. The rule would become effective Aug. 17.

Democrats, such as Rep. John Dingell (D, Mich.), chair of the Energy and Commerce Committee, were disappointed that Congress came within 11 votes of overriding a veto without succeeding. "Unfortunately, Republicans in the House and Senate have chosen to join the president's efforts to deny health care to an additional 4 million uninsured children."

Since last summer, many Republicans have complained that Democrats have ignored their input on SCHIP, but the Bush vetoes turned out to be a powerful weapon. Said Minority Leader Sen. Mitch McConnell: "Again and again, we've insisted the minority be heard and, in the end, we were."

Washington -- Congressional patience with the pace at which physicians are adopting electronic prescribing seems to be wearing thin. House and Senate lawmakers have introduced legislation that would mandate e-prescribing for Medicare beginning in 2011.

At a Dec. 4, 2007, Senate Judiciary Committee hearing, lawmakers also expressed frustration with the lack of movement toward allowing e-prescribing of controlled substances.

Sponsors of the two electronic prescribing bills tried to fold the legislation into a measure to prevent next year's 10.1% Medicare physician payment cut. But the language was not included in a last-minute Medicare package.

Rep. Allyson Y. Schwartz (D, Pa.), one of the bill's sponsors, said that if the measure didn't pass in 2007, she would press for hearings and continue to vet the legislation in 2008, according to her spokeswoman, Rachel Manguson.

The bills would fine physicians who continued writing paper Medicare prescriptions after Jan. 1, 2011. They would allow the Health and Human Services secretary to give one- or two-year exemptions to physicians facing hardships buying and implementing the technology. The measures would give HHS discretion to determine what constitutes a hardship, according to the office of Sen. John Kerry (D, Mass.), a sponsor of the Senate bill.

The legislation, the Medicare Electronic Medication and Safety Protection Act, also would provide one-time Medicare grants to offset the costs of e-prescribing technology. The grants would be $2,000 in the first two years of implementation, $1,500 in the next two years, and $1,000 permanently thereafter.

Almost 7 million Americans abuse prescription drugs.

The amounts go down because costs usually drop after a technology's introduction. Typical startup costs to comply would be around $2,800, according to Schwartz's staff.

The bills would not set an e-prescribing standard. The Centers for Medicare and Medicaid Services would handle that task. Any technology that met the standards would qualify physicians for the payment, said a Schwartz staff person.

Doctors also would receive a 1% bonus on Medicare evaluation and management services provided in conjunction with an e-prescription, as long as they electronically prescribed at least a certain portion of their scripts. HHS would determine the threshold. The extra payments would be permanent, the staffer said. But pay for E&M services provided during a visit in which a prescription was written on paper would be cut 10% if the prescription could have been handled electronically.

The American Medical Association has not taken a formal position on the bills. The AMA supports the voluntary adoption of health information technology and federal government efforts to promote it. The Association strongly opposes mandates.

The Schwartz staff person acknowledged the AMA's opposition to mandates and said the lawmaker was willing to accommodate its concerns. The goal is to encourage e-prescribing and improve patient safety while not being punitive, the source explained.

Senators criticize e-prescribing ban

Meanwhile, the Senate Judiciary Committee held a hearing Dec. 4, 2007, on allowing electronic prescribing of controlled substances. The Drug Enforcement Administration has been considering new regulations to permit this practice since 2006 but has not committed to a timeline, said Sen. Sheldon Whitehouse (D, R.I.).

Current law requires paper prescriptions for controlled substances. As a result, many physicians write all scripts by hand, rather than maintain two separate systems, he said.

"Billion-dollar transactions are done electronically, highly classified national security information travels electronically, military attack aircraft are targeted electronically. Don't tell me we can't figure out a way for a doctor to prescribe Vicodin electronically," Whitehouse said.

Sen. Arlen Specter (R, Pa.) said he supports allowing physicians to e-prescribe controlled substances. It is understandable that the DEA wants to establish a paper trail for controlled substances, he said. But, he noted, electronic transmissions such as e-mails are traceable.

Sen. Edward Kennedy (D, Mass.) expressed disappointment that the DEA turned down a waiver from Massachusetts to allow e-prescribing of controlled substances and said he hoped the agency would work with CMS on new regulations.

The AMA supports e-prescribing of controlled substances as long as security measures are in place to ensure patient confidentiality and the information's integrity.

DEA Deputy Assistant Administrator Joseph T. Rannazzisi told senators that the agency supports e-prescribing of controlled substances but that adequate safeguards must be established to prevent criminals from diverting drugs for illicit use. Rannazzisi noted that almost 7 million Americans abuse prescription drugs, up from 3.8 million in 2006.

While there is no timeline to establish new regulations, Rannazzisi told senators that he believes the rulemaking process will be completed in three years. He promised to provide a formal timeline within 60 days.

The DEA rejected the Massachusetts waiver because one of the state's goals was to create a nationwide system that could be used for e-prescribing controlled substances, Rannazzisi said. Such a system would have to be created by federal agencies, he explained. The DEA is working with Massachusetts on resubmitting its proposal so it can be approved, he added.

At the hearing, Rite Aid Corp. Vice President Mike Podgurski said the company supports e-prescribing for controlled substances. It would speed the spread of e-prescribing technology, he said. It also would reduce theft by replacing paper prescription pads, which are easier to steal and forge, Podgurski said.

Whitehouse followed up the hearing with a Dec. 17, 2007, letter to the DEA formally requesting that it promptly issue standards for prescribing controlled substances. The letter was signed by a bipartisan group of 18 senators, including Sens. Kennedy and Specter.

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Washington -- The American College of Physicians has endorsed the concept of a single-payer health care system for the first time.

In a new position paper, the organization, which represents 124,000 physicians in internal medicine and related subspecialties, identified a system in which the federal government is the sole third-party payer as one of two reform vehicles to achieve universal coverage. The other is a public-private system that includes a legal guarantee that everyone has access to coverage and that offers health care subsidies to low-income residents.

The ACP likely was influenced by the general deterioration of the U.S. health system, with its 47 million uninsured and decreasing affordability of health care, said David Dale, MD, the organization's president.

The 31-page paper, published Dec. 4 on the Annals of Internal Medicine Web site and in the Jan. 1, 2008, print issue, compares the U.S. health care system to systems in 12 other industrialized countries and offers eight major health reform recommendations based on that review. One proposal calls for adoption of a single-payer or pluralistic system, while the others tackle everything from electronic health records to physician training.

The paper is part of the college's ongoing effort to effect changes to the U.S. health care system that would support patient-centered medical homes, in which a primary care physician coordinates care. The ACP endorsed guidelines for establishing medical homes in March.

"I think there's a consensus that our system is not working very well, and when we compare it with others, that brings it into the spotlight," Dr. Dale said. The paper highlights how the U.S. system, compared with others, underemphasizes primary care, in part, by not covering everyone.

Dr. Dale said the heart of the reform proposal is making sure that everyone has access to primary and preventive care.

ACP leadership reviewed the paper for about six months. "What we have is a consensus document," he said. Dr. Dale said he received only a few e-mails -- all positive -- about the paper in the first few days after it was published online. He had anticipated receiving some negative comments from members questioning why the ACP didn't ask for their opinion, but Dr. Dale said he senses that support for single-payer is growing among younger physicians.

That consensus does not extend to the American Medical Association or the American Academy of Family Physicians. The AMA opposes a single-payer health system, and the AAFP has not taken a position on the issue.

But a co-founder of Physicians for a National Health Program welcomed the ACP position. "It says that the mainstream is ready for [single payer]," said David Himmelstein, MD. "It doesn't go as far as we'd like to see, but it's a big step forward."

Dr. Dale said the U.S. already has more than 40 years' experience with single-payer health care -- in the Medicare program. "So single-payer hasn't failed in America. It's actually succeeded."

But AMA President Ron Davis, MD, takes a different lesson from Medicare. Both Medicare and Medicaid sometimes pay physicians less than it costs doctors to provide care. Inadequate payment leads physicians to limit the number of elderly, disabled and poor patients they see.

"While other nations' experiences with single-payer health care provide important information, we need look no further than our own experiment with government-run health care to see the flaws with this approach," Dr. Davis said.

AAFP President Jim King, MD, said many of his members wouldn't support the organization endorsing a single-payer system. AAFP membership is divided on the issue much in the way America is split between urban and rural, and Democratic- and Republican-leaning areas, he said.

Instead, the AMA and AAFP have proposals that would expand health care access and call for patient protections, choice and responsibility.

The 26-page AMA plan, promoted in its Voice for the Uninsured campaign, recommends increasing individual access to health insurance by offering refundable tax credits or vouchers, with larger subsidies for low-income people, who could get their credits in advance. The Association also calls for increasing individual choice by standardizing health insurance regulations to help broaden insurance markets.

"Our pluralistic approach to covering the uninsured focuses on tax credits to individuals and families, individual ownership and choice of health insurance, and market reforms," Dr. Davis said.

The seven-page AAFP plan, "Health Care Coverage for All," recommends creating patient-centered medical homes and offering incentives for patients to seek care through those entities.

It also would safeguard patients against excessive medical costs by capping out-of-pocket spending at a fixed amount per household, possibly $5,000, and offering a free, basic set of mostly primary and preventive health care services.

The AAFP proposal doesn't delve into how the U.S. should pay for health care. Dr King said it's more important for the organization to focus on the kind of health care delivery system the country should have.

The financial structure can be worked out later, he said. "The problem at this particular stage is when you start mentioning a specific plan and how it's going to be paid for, it closes so many doors," he added.

Could be influential later

The ACP position paper won't cause the 2008 presidential candidates to change their health plans, which already have been issued, but it could influence health reform after the election, said Robert Blendon, ScD, professor of health policy and political analysis at Harvard School of Public Health.

A large physician organization like the ACP hasn't endorsed single-payer before. Once the election is over, the paper could gain political traction.

"[The paper is] important for sort of setting an agenda for the future," Dr. Blendon said.

That assumes, however, that Congress tackles health system reform. "The country is concerned about things now other than redoing the health care system," he said.

Washington -- With congressional debate on an upcoming 10.1% Medicare cut to physicians stretching into the final weeks of the year, physicians' decisions on whether to participate in the program in 2008 took on added degrees of importance and complexity.

The year-end deadline for physicians to change their participation status is important because it likely will determine how doctors will be able to bill the program and receive payment for all of 2008. If physicians do not inform their Medicare carriers in writing of their intent to change their status before Jan. 1, they will be locked into their current choices for the next 12 months -- possibly under a newly reduced fee schedule.

This year's decision is more complicated than usual given the pay cut's unprecedented size and lawmakers' delay in addressing it. The American Medical Association urged doctors earlier this month to look extra hard at Medicare participation options in light of the political situation.

"Unless Congress takes immediate action ... Medicare will begin across-the-board cuts on Jan. 1," said AMA President Ron Davis, MD. "Congressional action is not guaranteed, so physicians interested in changing their Medicare participation status for 2008 should review the information now, fill out the forms and prepare to mail them prior to Dec. 31."

The AMA has a document on its Web site (www.ama-assn.org/ama1/pub/upload/mm/399/medicarepayment08.pdf) outlining participation options and telling doctors how to change status. If Congress fails to reverse the cut by Jan. 1, but does so after it reconvenes, lawmakers could decide to let doctors who changed their status revert to their prior choice.

Physicians who participate in Medicare, or PAR for short, agree to accept Medicare's fee schedule amounts for all of the claims they file.

Doctors who don't take Medicare assignment can balance-bill patients up to 15% more.

Physicians who decide not to participate still can see Medicare patients for a reduced fee. They can decide on a per-patient basis to accept this "assignment." Doctors who don't accept assignment get the reduced rate and also can balance-bill patients up to 15% more. As a result, they may receive up to 9.25% more than participating doctors for the same services.

Changing from participating to nonparticipating status has a potential downside. Non-PAR physicians who do not accept assignment do not receive the government's portion of the fee directly from their carriers. Instead, Medicare reimburses the patient directly. The physician thus must invoice the patient for the full amount: the payment, co-payment and balance-billing charge.

This trade-off is especially important with the uncertainty over the physician pay cut, states the AMA's participation options document.

"With a 10% cut about to be imposed, many physicians may consider balance billing an extra 9% as one means of helping close the gap between 2007 and 2008 payment amounts," the document says. "When considering whether to be non-PAR, however, physicians should consider whether their total revenues from Medicare, including amounts the program pays, patient co-pays and balance billing, would exceed their total revenues as PAR physicians, particularly in light of collection costs, bad debts and claims for which they do accept assignment."

A third option, known as private contracting, means that physicians opt out of Medicare completely for at least two years. During that time, neither they nor their patients can bill Medicare for any of their services.

Pros and cons

Some physicians drawn by the added payment flexibility have switched to a nonparticipating Medicare arrangement and never looked back.

Lawrence K. Monahan, MD, an internist in Roanoke, Va., and former president of the Medical Society of Virginia, is part of a practice that went non-PAR more than a decade ago. He said seeing Medicare patients without accepting assignment has led to few problems with collecting the full bills from patients and that hardly any beneficiaries resist the added charges. "If the doctor and the patient have an open and honorable relationship, the patient trusts the doctor to give professional advice and the doctor trusts the patient to pay the bill."

Collecting slightly higher fees from some patients also gives him and his colleagues the flexibility to reduce or eliminate out-of-pocket Medicare bills for more needy patients, something not possible for PAR doctors, Dr. Monahan said. The ability to balance-bill when appropriate could be the saving grace, he said, for many practices that are considering turning away Medicare patients next year.

But relying on patients to pay the government's portion as well as their own share makes this a tough sell for many physicians, said Jeffrey P. Harris, MD, an internist in Millwood, Va., and president-elect of the American College of Physicians. Specialists who see many Medicare patients and often provide more costly services might find themselves in dire financial straits if only a few patients fail to pay up. Some doctors trade the potential for higher payments through nonparticipation for the guarantee that the government will pay its 80% if they accept assignment, so they don't need to chase down payment from patients.

The AMA estimated that non-PAR physicians would need to collect the full charge -- with balance billing -- allowable under Medicare statute for at least 35% of their services just to stay even with PAR doctors.

The potential impact on patients is a major factor in a practice's decision to become nonparticipating, Dr. Harris said. Patients used to having billing handled by Medicare and supplemental insurers -- and who are reluctant to spend more out of pocket -- will protest if that change is made, he added.