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Briefs: Congress acts to avert physician pay cut

January 2007

Published in the January 2007 issue of Today’s Hospitalist.

The new year is starting on a relatively good financial note for hospitalists: Last month, Congress averted a planned, across-the-board 5% cut in physician payments, acting to instead freeze physician payments at 2006 rates.

Add that averted cut to the rate increases for evaluation and management (E/M) services that took effect this month, and hospitalists can expect to see gains in 2007 over last year’s Medicare payments. The Society of Hospital Medicine estimates that hospitalists will see Medicare payments jump 8.8% for E/M billings related to admissions, subsequent visits and patient discharges.

Those payment increases are due to changes in relative value unit (RVUs) that took effect Jan.1. Payments will rise for mid-to-higher level inpatient services, while some payments for mostly lower level E/M codes and for procedures will fall. It is hoped that commercial insurers will follow suit and increase payments for some E/M services.

The legislation that averted the physician pay cut also made headlines because for the first time, Congress tied an additional 1.5% Medicare payment bonus to a transitional pay-for-reporting program. Analysts see the pay-for-reporting provisions as a Congressional move to create an infrastructure for an eventual pay-for-performance program.

Beginning July 1, 2007, physicians will become eligible for the bonus if they voluntarily report individual quality data on three different measures for the rest of 2007. The voluntary Medicare reporting program began last year, targeting primary care physicians, emergency physicians, nephrologists and surgeons. At press time, the bill containing the rate freeze hadn’t been signed into law but was expected to be.

At the same time, experts point out that the formula that would have mandated a 5% pay cut still has not been overhauled “and that physicians are expected to see another 5% cut for 2008. A list of Medicare’s 66 voluntary reporting quality measures can be downloaded online.

Do better performance data really reflect better quality?

Researchers who compared hospitals that had high and low scores on Medicare performance data found little difference in the death rates for three reported conditions. They concluded that the performance measures being used may not accurately reflect patient outcomes.

The study, which was published in the Dec. 13, 2006, Journal of the American Medical Association, analyzed data from Hospital Compare, a Web site maintained by the Centers for Medicare and Medicaid Services (CMS). Hospital Compare reports results of hospital performance measures.

Researchers looked at data on care delivered between Jan. 1 and Dec. 31, 2004, on 10 performance measures for heart attack, heart failure and pneumonia. They compared those data to hospital risk-adjusted death rates, measured by Medicare Part A claims.

Among their findings were the following:

  • Heart attack measures. The absolute reduction in risk-adjusted death rates between those hospitals in the 25th percentile vs. those in the 75th was 0.005 for inpatient death, 0.006 for 30-day death and 0.012 for death at one year.
  • Heart failure measures. The absolute death reduction was even smaller between top-ranked and lower-ranked hospitals for these measures, ranging from 0.001 for inpatient death to 0.002 for death at one year.
  • Pneumonia measures. The absolute reduction in death ranged from 0.001 for 30-day death to 0.005 for inpatient death.

An editorial that accompanied the study said that the CMS should implement measures that can be more tightly linked to patient outcomes before initiating pay-for-performance programs or encouraging consumers to choose hospitals based on performance data. Because the difference between performance and outcomes was so small, researchers said, any incentive programs tied to performance measures should target only the lowest performing hospitals.

In other pay-for-performance news, the CMS late last year announced that it would begin this June publicly reporting risk-adjusted 30-day mortality rates for all Medicare patients with a principal discharge diagnosis of acute myocardial infarction and heart failure.

Quick facts: trends in elderly hospitalizations

  • From 1997-2004, elderly Americans represented 12% of the U.S. population, but 35% of hospital stays.
  • Over that period, the average hospital costs for an elderly patient increased by more than 25%, from $7,800 per stay in 1997 to $9,800 per stay in 2004.
  • While costs rose, the average length of stay fell by just under one day, from 6.4 days in 1997 to 5.7 days in 2004
  • The rate of hospital admissions from the emergency department in 1997-2004 rose from 49% to 57%.
  • The number of elderly in the U.S. is projected to double from 35 million in 2000 to an estimated 71 million in 2030.