New Law That Delays Medicare Physician Payment Cut Also Affects Beneficiaries

The new Medicare law that passed on Tuesday not only delays for 18 months a 10.6% reduction to physician fees, it also contains provisions that directly affect beneficiaries, the Wall Street Journal reports.

The law reduces the copayment for mental health services from 50% to 20%, which is consistent with copays for other health services. It will be phased in through 2014. Officials from the American Psychiatric Association said the change should attract more mental health care professionals to Medicare. The change comes as Congress is considering mental health parity legislation that would require employers and private insurers to provide the same coverage of mental illnesses as physical conditions, according the Journal.

Another provision of the new law is that two new classes of drugs will be covered by the Medicare drug benefit: benzodiazepines, commonly used for anxiety, and barbiturates, often used as sleep aids. The new classes will only be covered for beneficiaries with specific conditions, which include cancer, epilepsy and chronic mental health conditions, according to the Journal.

In addition, the law "takes a modest step toward encouraging some preventive care," the Journal reports. In 2009, the period for new beneficiaries to receive an initial Medicare physical will be extended from six months to one year. The cost of the physical also will not count toward the Medicare annual deductible, which typically is $135 per year. However, Medicare still will not cover routine physicals after the initial examination. Beginning next year, the law also grants CMS the ability to add new screening or preventive services to Medicare. Currently, it requires a special act of Congress to include these kinds of services. Two services that are expected to be considered by CMS for coverage are intense weight-loss counseling and specific genetic tests for breast cancer, according to the Journal.

New Restrictions
The law also contains new restrictions that will affect some beneficiaries, particularly those who receive care through a private plan in Medicare Advantage. So-called private fee-for-service plans under MA will be required by 2011 to establish provider networks similar to those established by HMOs and PPOs. Currently, private fee-for-service plans allow beneficiaries to see any physician willing to accept a plan's terms of payment. The rule will only apply to geographical regions in which beneficiaries have at least two additional MA plan options.

Physicians Also Affected
The law establishes an electronic prescribing initiative under which physicians will initially receive a slight boost in payments for using the technology. However, in later years physicians will see a payment reduction for not adopting e-prescribing. About 40,000 U.S. physicians currently use the technology. About 70% of all pharmacies can receive e-prescriptions, but only 31% of independent pharmacies use the technology, according to SureScripts-RxHub (Wilde Mathews/Zhang, Wall Street Journal, 7/17).

Durable Medical Equipment
Medicare beneficiaries who use durable medical equipment and providers of such medical supplies also are affected by the new law, which rolls back and delays a pilot competitive bidding program, the Miami Herald reports. The first phase of the program, which began July 1, affects beneficiaries and suppliers in 10 of the largest Metropolitan Statistical Areas for 10 types of DME. The bidding program reduced the number of suppliers in the 10 MSAs to 325.

CMS officials on Wednesday announced that beneficiaries can return to using any Medicare-approved supplier and that "payment rates in effect prior to July 1 are reinstated retroactively." CMS estimated the program would have saved beneficiaries on average 30% on out-of-pocket costs for DME. However, Rob Brant, president of the Accredited Medical Equipment Providers of America, said that the savings estimate was not accurate. In addition, he said that many of the suppliers that won bids did not have the experience, or in some cases the licenses, to provide such services. The program also would have helped reduce fraud, according to the Herald. Last year, Medicare found that 491 of 2,700 DME suppliers in south Florida did not have physical facilities or were not open for investigations (Dorschner, Miami Herald, 7/17).

Editorial
"We hope" that President Bush's veto of Medicare legislation (HR 6331) "means that the next Congress will be emboldened to make more far-reaching reforms in Medicare to help keep the system solvent and able to provide high-quality care for older Americans," the New York Times writes in an editorial. The Times continues that the law "sensibly" makes a "moderate reduction in the 13% average subsidy lavished on private plans that participate in Medicare."

According to the Times, "The next Congress should build on this modest success and tackle more deep seated reforms," including fixing the "outdated" physician payment formula and "do[ing] away with the unjustified subsidies that prop up Medicare's private plans." The editorial concludes that the "victory" on the Medicare law shows that "reform is not only essential, it's also possible" (New York Times, 7/17).

Broadcast Coverage
American Public Media's "Marketplace" on Wednesday reported on the Republicans' break from Bush on some issues, including their support of the veto override on the Medicare bill (Marshall Genzer, "Marketplace," American Public Media, 7/16).