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Congress Passes Legislation Halting 5 Percent Payment Reduction in 2007: Funding Structure and Quality Reporting Provisions Raise Serious Concerns Before adjourning for the year, Congress passed the “Tax Relief and Health Care Act of 2006,” which freezes Medicare physician payments at 2006 levels; thus preventing the 5 percent cut that was scheduled to occur on January 1, 2007. The bill also prevents additional cuts (particularly for physicians living in rural areas) due to changes in the geographic practice costs index (GPCI). Finally, the bill includes an additional 1.5 percent bonus payment for those physicians who report certain quality measures between July 1 and December 31, 2007; though these bonus payments will not be paid until 2008. On average, neurosurgeons will now be facing a 3 percent payment cut (1 percent for changes due to five-year review of work relative values; 1 percent due to practice expense changes; and 1 percent due to reductions in reimbursement for imaging services) in 2007, rather than the 8-12 percent cut previously expected. The AANS and CNS did not support this legislation because The way in which the payment freeze is financed is extremely problematic; The bill creates a new fraud and abuse program; and We have serious concerns about the new “quality” reporting system. Flawed Financing Structure – The bill includes a budgetary gimmick that will lead to even steeper cuts in 2008. While Congress shifted money from the Medicare managed care stabilization fund to pay for the freeze in 2007, it did not change the underlying payment formula. As a result, the SGR formula is still in place and physicians will face a 7-10 percent payment cut in 2008 instead of the anticipated 5 percent cut. New “Bounty Hunter” Program – Congress expanded the recovery audit contractor (RAC) program to all 50 states (currently this demonstration program is only operating in California, Florida and New York). Under the RAC program, the Centers for Medicare and Medicaid Services (CMS) contracts with bill collectors who are authorized to audit physician practices in search of improper Medicare payments that may not have been detected through the existing fraud and abuse programs. These contractors are essentially “bounty hunters” and are paid a percentage of any overpayments they collect. Burdensome “Quality” Program – The legislation is structured in a way that creates a burdensome new program that may do little to actually improve quality. Initially, CMS is required to build on the existing Physician Voluntary Reporting Program (PVRP), which was launched earlier this year as an opportunity to test data collection and reporting methods before tying Medicare reimbursement to a physician quality reporting program. Starting in July 2007, physicians can qualify for the 1.5 percent bonus payments if they report to CMS on at least three of the program’s quality measures for at least 80% of the cases in which the measures apply. Several measures, including antibiotic and VTE prophylaxis, are applicable to neurosurgery. In 2008, CMS has broad authority to implement a quality reporting program that could potentially become mandatory pay for performance. Although the legislation states that CMS will select measures that have been developed under a consensus-based process and adopted or endorsed by a consensus organization, the AANS and CNS are concerned that this language is too vague and gives CMS free reign over the selection of measures without much oversight, direction and input from physicians. The AANS and CNS, working with others in organized medicine, will educate the new Congress about the problems with the Medicare physician payment system, as well as our concerns about the quality reporting program, in an effort to implement significant changes to this legislation. In the meantime, if you have questions regarding this legislation, please contact Lori Shoaf, Senior Manager for Legislative Affairs, AANS/CNS Washington Office at lshoaf@neurosurgery.org or 202-628-2072. More Information: For a detailed summary of the legislation, visit: http://www.aans.org/legislative/aans/Summary and Legislation 2006.pdf. To see how your member voted on this legislation, please visit: http://capwiz.com/noc/keyvotes.xc/?lvl=C . Information on the current RAC demonstration program can be found at: http://www.cms.hhs.gov/RAC/ . For a current list of quality measures applicable to neurosurgical practice go to: http://www.aans.org/legislative/aans/Neurosurgical Quality Measures.pdf. For more information on the PVPR program, go to: http://www.cms.hhs.gov/PVRP/