May 31, 2005

Congress Introduces Medicare Payment Bill
Legislation has been introduced in both the House and the Senate that would prevent cuts in Medicare payments to physicians in 2006 and 2007. The “Preserving Patient Access to Physicians Act of 2005,” introduced by Sens. Jon Kyl, R-Ariz., and Debbie Stabenow, D-Mich., and Reps. Clay Shaw, R-Fla., and Ben Cardin, D-Md., would set a minimum Medicare physician payment increase of 2.7 percent in 2006 and un update in 2007 that reflects cost inflation of physician practice (currently estimated at roughly 2.6 percent). The House bill goes one step further to eliminate the current sustainable growth rate (SGR) formula beginning in 2007. Physicians are currently facing a 4.3 percent cut in Medicare payments in 2006 and subsequent cuts over the next six years if Congress does not act.

Upon introducing the bill in the Senate, Kyl said, “The SGR was intended to control expenditures by basing a given year’s physician payment rate on the previous year’s performance. Instead, it creates an arbitrary deficiency that continues to force Congress to intervene.” The price tag of the House bill is roughly $154 billion over 10 years. The Senate bill sponsors estimate that the cost of a statuary update in 2006 and 2007 would cost $25 billion to $35 billon over the next five years.

Specialty Hospital Debate Continues
With a Medicare moratorium on physician-owned specialty hospitals set to expire on June 8, legislators continue to debate whether to lift or extend the ban on these facilities that serve cardiac, orthopedic and surgical patients. At a May 24 congressional hearing, Medicare Payment Advisory Commission (MedPAC) representative Mark Miller told Senate subcommittee members that the moratorium should be extended until Jan. 1, 2007. The American Medical Association also testified at the hearing, calling for an expiration on the current moratorium and “competition between and among health facilities as a means of promoting the delivery of high-quality, cost-effective health care.”

In related news, the Republican Policy Committee released a specialty hospital briefing paper to Republican congressional offices outlining the current specialty hospital moratorium debate. The paper concludes that “based on the current lack of evidence of harm from specialty hospitals, extension of the moratorium is not warranted,” but recommends that Congress consider payment reforms recommended by MedPAC and the Centers for Medicare and Medicaid Services. Click here to view the policy paper.

Illinois Wins Long-Awaited Reform
After years of pushing for meaningful liability reform in one of the states hardest hit by soaring liability premiums, Illinois physicians have a legislative victory to celebrate. Last week, the Illinois state legislature passed a bill capping non-economic damages in medical liability cases at $1 million for hospitals and $500,000 for physicians. The bill also incorporates several provisions supported by physicians, including criteria for judging a lawsuit’s merit and protections for physicians who volunteer at community health clinics.

Gov. Rod Blagojevich, D, has indicated his intent to sign the bill, but trial lawyers plan to mount an immediate challenge to the law, citing a 1997 Illinois Supreme Court decision that found a law implementing caps on damages unconstitutional. Jay Alexander, M.D., F.A.C.C., a leading advocate for liability reform in Illinois, cautions that the fight for liability relief is “far from over,” but believes the recently passed legislation “is a good compromise,” that will benefit Illinois patients, physicians and businesses.

Compromise Liability Bill Introduced
Three House Democrats introduced a bill this week that aims to re-engage the Senate in the debate over medical liability reform. The House has repeatedly passed legislation that places a $250,000 cap on non-economic damages, but each time the bills have died in the Senate. The newly introduced legislation includes an inflation-adjusted cap on non-economic damages that would start at $878,000 in 2005 and rise incrementally each year. The bill’s sponsors arrived at the $878,000 cap by calculating what the cap in California would be now if it has been adjusted for inflation since its inception in 1976. The bill also instructs medical liability insurers to implement a plan to reduce physician premiums and punishes plaintiffs who repeatedly file meritless claims.

One of the bill’s sponsors, Congressman Brian Baird, D-Wash., claimed, “this legislation not only provides solid protections to patients, but also offers provisions that everyone can agree on.” The bill will be referred to the House Energy and Commerce and Judiciary Committees. Read more here.