Senators Say CMS Should Delay Medicare Payment Changes

Senate Finance Committee Chair Chuck Grassley (R-Iowa) and ranking member Max Baucus (D-Mont.) in a letter on Friday urged CMS Administrator Mark McClellan to delay by one year implementation of proposed changes in the way Medicare pays for inpatient care, CQ HealthBeat reports (Reichard, CQ HealthBeat, 7/10). CMS in April proposed the changes, which include the closure of loopholes used by specialty hospitals and a plan to replace the current charge-based reimbursement system with a cost-based system (California Healthline, 6/7).

One effect of the "sweeping changes" proposed by CMS "would be substantial cuts for medical devices such as coronary stents and implantable defibrillators," Dow Jones Newswires reports.

Grassley and Baucus said in the letter said that two key parts of the rule change should be delayed until fiscal year 2008 because "more time is needed to assure an orderly and appropriate implementation" of the changes. They said implementation of the cost-based system, which is scheduled for October, should be delayed, in part because of the potential for inaccurate payments to device manufacturers (Kamp, Dow Jones Newswires, 7/10).

The second part of the change that the senators said should be delayed is the adoption of "severity-adjusted payments," which would reimburse hospitals more for treating sicker patients. Severity-adjusted payments are scheduled to go into effect in October 2007.

Grassley and Baucus said they have "serious concerns" about the proposed changes and their timeline. "Moving toward a fair and accurate hospital inpatient system is long overdue," they said, adding, "Now it's a matter of making sure the implementation of that policy really works for hospitals."

The senators also said both rule changes, when revised, should be implemented at the same time.

One health care lobbyist said, "A one-year delay looks more likely with the Finance letter." Other analysts noted that House Ways and Means Committee Chair Bill Thomas (R-Calif.), who supports the rule changes, said that the "difference between Thomas and Grassley ... could end with the two types of changes beginning concurrently this fall, but under a multiyear transition schedule in which only a portion of inpatient payments are calculated using the cost-based and severity adjustments, and only for a very limited set of inpatient procedures," CQ HealthBeat reports (Reichard, CQ HealthBeat, 7/10).

A CMS spokesperson was unavailable for comment (Dow Jones Newswires, 7/10).

In related news, Sens. Jon Kyl (R-Ariz.) and Debbie Stabenow (D-Mich.) in a letter to Senate Majority Leader Bill Frist (R-Tenn.) and Senate Minority Leader Harry Reid (D-Nev.) said the Senate should increase Medicare physician reimbursements before it adjourns in October, CQ HealthBeat reports. According to Kyl and Stabenow, physician reimbursements will be cut by 5% as of Jan. 1, 2007, unless Congress intervenes.

The senators cited a 2006 American Medical Association survey that found that if reimbursements are cut in 2007, 45% of physicians would cut the number of new Medicare beneficiaries they treat, and 43% would lower the number of new Tricare beneficiaries they see. Tricare bases its physician reimbursements on Medicare rates. "At a minimum, we must provide physicians with a positive Medicare payment update for 2007," Kyl and Stabenow said (CQ HealthBeat, 7/10).