Physician Payment Reform: Update on Implications for Cardiac Surgery Glenn R. Markus Health Policy Alternatives, Washington, DC
I
am sure that many of you found Dr Noether’s report about the findings from the Abt study both very interesting and encouraging. The report certainly provides a solid basis for further discussions with policymakers about physician resource inputs relating to cardiothoracic services. I feel obliged, however, to take a little bit of the edge off of the good feelings you may have about the results from the Abt study because how the study will be received by decision makers is not yet clear. Additional plans are now being drawn up by Dr Ginsburg and his staff, and by the staff of the Health Care Financing Administration (HCFA), to make further refinements in the relative values for all physicians’ services under Medicare, including those of your specialty. There will be opportunities for The Society of Thoracic Surgeons to share the results of the Abt study on several occasions during the next few critical months. Ultimately, of course, the actual payment levels for cardiothoracic services under the fee schedule will be determined by more than estimates about the physician work inputs alone. Other policy decisions and data having to do with such matters as overhead expenses, professional liability costs, geographic location, budget neutrality calculations, and so on are also important matters. Defining standardized payment units-that is, standardized definitions of global surgical services-is also a very important consideration in setting fees under payment reform. Some of HCFA’s thinking about these critical issues was recently published by the agency in the September 4, 1990, issue of the Federal Register. This announcement is an important document for all physicians because it sets forth ideas and options about how payment reforms may be implemented by the government. Although the commission’s views on various payment reform issues carry great weight, they are nevertheless of an advisory nature. It is the HCFA that is charged by Congress to carry out the payment reform plan. Let me spend my time looking briefly at some of the ideas spelled out in the HCFA notice from the standpoint of cardiothoracic surgery. The notice starts by observing that the first phase of the Harvard resource-based relative value study looked at services both by direct examination and by extrapolation that cover about two-thirds of all Medicare allowed charges. The material coming from the second round of Presented at the Interim Meeting of The Society of Thoracic Surgeons, Chicago, IL, Sep 21-23, 1990. Address reprint requests to Mr Markus, Health Policy Alternatives, 222 C St, NW, Suite 820, Washington, DC 20001.
0 1991 by The Society of Thoracic Surgeons
the Harvard project is expected to extend the reach of this information to include about 95% of allowed charges for physicians’ services. According to the HCFA notice, the agency intends to develop physician work values from a number of different sources. The notice states further that much of the data for this purpose will olbviously come from the Hsiao project team. However, HCFA also acknowledges in its announcement that The Society of Thoracic Surgeons is supporting a restudy of cardiothoracic services that is being conducted by Abt, and observes that the results from the study may “. . .prove helpful to HCFA in refining the [relative value units] for thoracic surgery” in preparing the final Medicare fee schedule. At The Society’s request, Dr Noether has already briefed the research and policy development staffs at HCFA about the study’s findings. A similar briefing will also be provided for Dr Ginsburg and his staff in another few days. There are other payment reform issues being worked on, in addition to those dealing with valuation, that are of critical importance for The Society and it:$ members as well. And, on a number of these, the agency has views that are different from those held by the commission. For example, the Physician Payment Review Commission, working with the American Medical Association CPT Panel, has developed a plan for making substantial changes in the CPT codes used for evaluation and management, or visit, services of physicians. The Society has generally supported the need for making fundamental reforms in the coding system in order that codes be uniformly interpreted as to their meaning and content. However, The Society shares some of the concerns expressed by HCFA about the use of time considerations as a major factor in defining various types of visit services. The agency has indicated its intentions to test the validity of the Physician Payment Review Commission’s coding reforms and is unlikely to support all of the changes recommended by the commission until further research is completed in this area. The Society has also felt that other basic coding reforms will be needed under payment reform in addition to those affecting office visits. The Society has expressed the view that the coding system as a whole must keep pace with changing developments in all of surgery and medicine. Unless the coding system is kept reasonably up-to-date, serious delays in adjustments under the CPT system will lead to distortions in the relative values assigned to procedures and adversely affect the diffusion of some new technological developments. This specialty in particular has had some problems in obtaining timely changes in Ann Thorac Surg 1991;52:40&9
-
0003-4975/91/$3.50
Ann Thorac Surg 1991;52:408-9
codes to reflect changes, for example, in coronary artery bypass grafting using an internal mammary artery or for redo coronary bypass grafting procedures. The Abt study will make it possible to document the effects of some of these coding problems on the values for such services. The global surgical definitions finally decided upon by Medicare will also have major consequences for cardiothoracic surgeons. The Health Care Financing Administration and the commission agree that the initial evaluation and consultation by a surgeon leading to the decision for operation should be reimbursed separately and apart from the global surgical fee. However, The Society of Thoracic Surgeons opposes HCFAs tentative proposal to include all other preoperative office and hospital visits as part of the global package. Instead, The Society will support the commission’s recommendations for including in-hospital visits on the day before and the day of operation in the global fee, but excluding other services rendered before this period. The HCFA announcement proposes policies for complications following operation that The Society believes are unacceptable and unfair. Among other options, the agency has expressed a preference for denying any payments outside of the global fee for complications requiring reoperations. The Society believes that separate payments for reoperations are justified under a resource-based approach to payment, and that the bundling of such services into the global fee would make sense only where such services were commonly required for the vast majority of cases. The Society believes, however, that the rates of reoperation for cardiothoracic procedures do not meet such a test and should, therefore, be reimbursed separately from global charges.
INTERIMMEETING MARKUS PHYSICIAN PAYMENT REFORM
409
Yet another area for your attention are the proposals from HCFA relating to the use of other payment modifiers, such as in cases where two or more physicians are involved in the co-management of a patient and each performs some portion of the services included in a global package of care. Cardiothoracic surgery is explicitly mentioned in the HCFA announcement insofar as this matter is concerned. Advice is being sought from The Society about how to assign the total values to global packages of services and, once assigned, how to disaggregate these values in circumstances where co-management may be involved. There are also major payment changes being considered by HCFA with respect to assistants-atoperation and payments for team operation that are of interest to the specialty. It is also important to keep in mind that the valuation activities by Harvard and those reported to you this morning by Abt relating to cardiothoracic procedures affect only one portion of the payment formula. Thus, although some changes in the values for your services seem likely to be made during the upcoming refinement process, overhead calculations and practice cost variation are also vital issues. So, too, is the calculation of the conversion factor, which will ultimately determine how much will be spent by the government for all physicians’ services under Medicare. As you can see, then, there is a need for The Society to continue to engage federal policymakers about a great many complex issues that affect the future of your practices. As George Miller said to you earlier this morning, this process may only be beginning. Thank you.
I
am sure that many of you found Dr Noether’s report about the findings from the Abt study both very interesting and encouraging. The report certainly provides a solid basis for further discussions with policymakers about physician resource inputs relating to cardiothoracic services. I feel obliged, however, to take a little bit of the edge off of the good feelings you may have about the results from the Abt study because how the study will be received by decision makers is not yet clear. Additional plans are now being drawn up by Dr Ginsburg and his staff, and by the staff of the Health Care Financing Administration (HCFA), to make further refinements in the relative values for all physicians’ services under Medicare, including those of your specialty. There will be opportunities for The Society of Thoracic Surgeons to share the results of the Abt study on several occasions during the next few critical months. Ultimately, of course, the actual payment levels for cardiothoracic services under the fee schedule will be determined by more than estimates about the physician work inputs alone. Other policy decisions and data having to do with such matters as overhead expenses, professional liability costs, geographic location, budget neutrality calculations, and so on are also important matters. Defining standardized payment units-that is, standardized definitions of global surgical services-is also a very important consideration in setting fees under payment reform. Some of HCFA’s thinking about these critical issues was recently published by the agency in the September 4, 1990, issue of the Federal Register. This announcement is an important document for all physicians because it sets forth ideas and options about how payment reforms may be implemented by the government. Although the commission’s views on various payment reform issues carry great weight, they are nevertheless of an advisory nature. It is the HCFA that is charged by Congress to carry out the payment reform plan. Let me spend my time looking briefly at some of the ideas spelled out in the HCFA notice from the standpoint of cardiothoracic surgery. The notice starts by observing that the first phase of the Harvard resource-based relative value study looked at services both by direct examination and by extrapolation that cover about two-thirds of all Medicare allowed charges. The material coming from the second round of Presented at the Interim Meeting of The Society of Thoracic Surgeons, Chicago, IL, Sep 21-23, 1990. Address reprint requests to Mr Markus, Health Policy Alternatives, 222 C St, NW, Suite 820, Washington, DC 20001.
0 1991 by The Society of Thoracic Surgeons
the Harvard project is expected to extend the reach of this information to include about 95% of allowed charges for physicians’ services. According to the HCFA notice, the agency intends to develop physician work values from a number of different sources. The notice states further that much of the data for this purpose will olbviously come from the Hsiao project team. However, HCFA also acknowledges in its announcement that The Society of Thoracic Surgeons is supporting a restudy of cardiothoracic services that is being conducted by Abt, and observes that the results from the study may “. . .prove helpful to HCFA in refining the [relative value units] for thoracic surgery” in preparing the final Medicare fee schedule. At The Society’s request, Dr Noether has already briefed the research and policy development staffs at HCFA about the study’s findings. A similar briefing will also be provided for Dr Ginsburg and his staff in another few days. There are other payment reform issues being worked on, in addition to those dealing with valuation, that are of critical importance for The Society and it:$ members as well. And, on a number of these, the agency has views that are different from those held by the commission. For example, the Physician Payment Review Commission, working with the American Medical Association CPT Panel, has developed a plan for making substantial changes in the CPT codes used for evaluation and management, or visit, services of physicians. The Society has generally supported the need for making fundamental reforms in the coding system in order that codes be uniformly interpreted as to their meaning and content. However, The Society shares some of the concerns expressed by HCFA about the use of time considerations as a major factor in defining various types of visit services. The agency has indicated its intentions to test the validity of the Physician Payment Review Commission’s coding reforms and is unlikely to support all of the changes recommended by the commission until further research is completed in this area. The Society has also felt that other basic coding reforms will be needed under payment reform in addition to those affecting office visits. The Society has expressed the view that the coding system as a whole must keep pace with changing developments in all of surgery and medicine. Unless the coding system is kept reasonably up-to-date, serious delays in adjustments under the CPT system will lead to distortions in the relative values assigned to procedures and adversely affect the diffusion of some new technological developments. This specialty in particular has had some problems in obtaining timely changes in Ann Thorac Surg 1991;52:40&9
-
0003-4975/91/$3.50
Ann Thorac Surg 1991;52:408-9
codes to reflect changes, for example, in coronary artery bypass grafting using an internal mammary artery or for redo coronary bypass grafting procedures. The Abt study will make it possible to document the effects of some of these coding problems on the values for such services. The global surgical definitions finally decided upon by Medicare will also have major consequences for cardiothoracic surgeons. The Health Care Financing Administration and the commission agree that the initial evaluation and consultation by a surgeon leading to the decision for operation should be reimbursed separately and apart from the global surgical fee. However, The Society of Thoracic Surgeons opposes HCFAs tentative proposal to include all other preoperative office and hospital visits as part of the global package. Instead, The Society will support the commission’s recommendations for including in-hospital visits on the day before and the day of operation in the global fee, but excluding other services rendered before this period. The HCFA announcement proposes policies for complications following operation that The Society believes are unacceptable and unfair. Among other options, the agency has expressed a preference for denying any payments outside of the global fee for complications requiring reoperations. The Society believes that separate payments for reoperations are justified under a resource-based approach to payment, and that the bundling of such services into the global fee would make sense only where such services were commonly required for the vast majority of cases. The Society believes, however, that the rates of reoperation for cardiothoracic procedures do not meet such a test and should, therefore, be reimbursed separately from global charges.
INTERIMMEETING MARKUS PHYSICIAN PAYMENT REFORM
409
Yet another area for your attention are the proposals from HCFA relating to the use of other payment modifiers, such as in cases where two or more physicians are involved in the co-management of a patient and each performs some portion of the services included in a global package of care. Cardiothoracic surgery is explicitly mentioned in the HCFA announcement insofar as this matter is concerned. Advice is being sought from The Society about how to assign the total values to global packages of services and, once assigned, how to disaggregate these values in circumstances where co-management may be involved. There are also major payment changes being considered by HCFA with respect to assistants-atoperation and payments for team operation that are of interest to the specialty. It is also important to keep in mind that the valuation activities by Harvard and those reported to you this morning by Abt relating to cardiothoracic procedures affect only one portion of the payment formula. Thus, although some changes in the values for your services seem likely to be made during the upcoming refinement process, overhead calculations and practice cost variation are also vital issues. So, too, is the calculation of the conversion factor, which will ultimately determine how much will be spent by the government for all physicians’ services under Medicare. As you can see, then, there is a need for The Society to continue to engage federal policymakers about a great many complex issues that affect the future of your practices. As George Miller said to you earlier this morning, this process may only be beginning. Thank you.
