2009 HEALTH POLICY COMMITTEE REPORT
Jeffrey Kaufman, MD, FACS, Chair, Health Policy Committee - WSAUA

The old Chinese curse "may you live in interesting times" certainly applies to today's health care delivery system and attempts to improve it.  All of you are aware by now of President Obama's plans for health care reform.  But you may not appreciate how significant the proposed changes will be to your day to day practice of urology. 

In order to achieve the goals Congress and the administration have set, we are likely to see a move away from traditional fee-for-service emphasizing instead pay-for-performance unlike anything previously experienced. The new buzzword is Value Based Purchasing, paying for quality of care, not quantity of care. For many, this will present a new paradigm, focusing on wellness and prevention rather than treating disease.  Irrespective of how this is implemented, the one thing we can count on is that change is coming.

Even though the president has listed 8 principles he would like to see incorporated into any new plan, at the time of writing this report legislation has not yet been presented and the final details are still being decided.  Therefore, what follows is a broad outline of where we are today and what we are likely to see introduced into Congress in the next couple of months.  Bear in mind that the timeline will be short in order to have passage this year and there are strong political reasons why it must be done before 2010 if it is to be done at all.  In order to have a bill passed before the August break, legislation must be ready to be marked up by June.  That means that staff is putting pen to paper ironing out the details of their new plan as we speak.  In response, the Western Section representatives, the AUA and the AACU must be ready to respond as soon as those details are known in order to protect our practices and our patients.  Certainly every other stake holder is actively involved and advocating for their own narrow special interests-often at cross purposes to ours.

For the past several years, our efforts inWashington D.C. have focused on trying to convince lawmakers how badly the system is flawed.  In that respect, there is no disagreement today that health care delivery in America is in crisis.  In 2007, total health care expenditures constituted 16% of the entire Gross Domestic Product.  That figure increases by 2025 to 25%, an unsustainable amount that crowds out spending on other vital services.  The debate more recently has focused on how to fix the system and how to pay for that reform.  From March 14-17, 2009, the AACU and AUA worked together to sponsor urology's fourth annual Joint Advocacy Conference in Washington, D.C.  As usual, this year, with a record turnout of more than 135 urologists from all over the country, the Western Section was heavily represented.  As part of the meeting, we spent time visiting with the Congress, Senate and their staffers (the ones who actually do the work and write the bills) in a very successful attempt to have them understand our concerns.  Coming as it did just as the decisions are being made on how to best craft legislation, our efforts were particularly focused this year.  Of course, what final appearance reform will take depends on how it is funded and what political horse trades are necessary to secure passage.  What we can count is that the bill will have something for every stakeholder to hate.  No one will love every part of the new system, but that is the compromise necessary to move this plan forward. 

Although many different proposals are currently being discussed, they all have in common 3 basic goals: improving access to care, improving the quality of care delivered and controlling costs.  Our concern as urologists is that we are included in the decision making of how quality is defined and measured, that the quality measures do not become new unfunded mandates, that oversight and regulation do not become so burdensome that practices are strangled, that we continue to control those elements of urologic practice necessary to insure proper outcomes (especially with respect to participating in various ancillary services that improve patient care such as imaging, ASCs and radiation therapy) and that we are fairly compensated for our efforts. 

Although we have been reasonably successful so far at controlling the processes that define quality care, major challenges remain:  barriers are being raised to participation in ancillary services, the carrot and stick approach to encouraging performance promises to emphasize the stick more than the carrot and the ongoing principle of "budget neutrality" poses a major threat as Congress adjusts fee schedules to value primary care services at the expense of all other care, shifting major funding away from specialists toward various forms of bundled payments that favor family doctors and some internists.

Although some feel that reform may not succeed unless sufficient funding is secured, Obama's current budget proposal and recent legislation have already begun the process.  In addition to requesting $634 billion as part of his new budget to be set aside as a down payment on reform, other funds have already been approved.  Twenty billion dollars have already been committed to develop health information technology that will become uniform, interoperable and universal across all elements of health care.  It is now taken as an article of faith in Washington that electronic health records are necessary for the salvation of the system.  The experts are convinced that using proper software will cut costs, avoid duplicative efforts and testing, and improve quality.  Obviously, there are many challenges to this dream that remain unsolved but those writing reform legislation have no doubt they will be overcome.

As part of that effort, the carrot and stick model promises bonuses that diminish over time to physicians who participate in electronic records beginning in 2011 totaling $44,000 before transitioning to increasing penalties up to 3% of total Medicare allowable charges or more for failing to use HIT starting 2015.  Already, bonuses of 2% of Medicare allowable charges are available beginning this year for the use of electronic prescribing.  By 2012, failure to use approved ERx will result in penalties up to 2%.  At the same time, the PQRI pay for performance process remains funded for at least another year providing an opportunity for additional 2% of Medicare allowable charges as bonus although it is unknown whether this too might develop into a penalty for failure to participate in the future.  In a similar fashion, we can count on future bonuses and penalties to encourage cooperation in other efforts to improve quality and cut costs.

At the same time, $1.1 billion has already been funded for Comparative Effectiveness Research.  While some would term this "rationing", the intent is to critically analyze data in order to determine what treatments provide the best outcomes at the best price.  The addition of the cost component to outcome measures raises concerns among many groups that the new system will not be able to provide everything to everyone, when they want it, all the time.  If cost is the product of price times quantity (C=PxQ) and cutting fees is a crude undesirable tool, then the variable that remains to manipulate has to be quantity.  Indeed, those with the political courage to speak out acknowledge that in order to control the burgeoning costs of healthcare, some limits will be necessary.  Panels have already been established to oversee this research and funding for grants is already available.  Unfortunately, because of economic pressures, this research is likely contribute to more aggressive turf battles as one specialty or area of focus tries to dominate treatment of a particular condition.  Therefore, it is important that urology retains the lead in this research, developing appropriate evidence based guidelines and standards so that we-and no one else-retain control of our areas of expertise.

Up until this year, one of our biggest demands of Congress was that the failed Sustained Growth Rate formula used to update Medicare fees be revised.  Since most private payers in one way or another base reimbursement on this figure, all payments are ultimately controlled by a system that is based on incorrect data, includes costs for part B drugs that are out of our control and artificially limits volume by relating health care expenditures to the Gross Domestic Product.  Updates from this calculation have been negative for many years but Congress, to avert steep cuts, has repeatedly and temporarily suspended each cut back in favor of small increases that still have not kept up with inflation (never mind accounting for substantial increases in overhead).  Because those updates were simply loans-never a gift--which the SGR formula demanded be repaid, each delayed cut caused the final adjustment to be steeper and steeper creating a debt Congress was unable to resolve.

Fortunately for us, since the current economic crisis has bloomed and figures are now thrown around Washington in the trillions of dollars without embarrassment, the amount of money necessary to "re-base" the SGR seems small in comparison.  Indeed, in Obama's budget, he has called for $330 billion to resolve the previous deficit and at the least, avoid an impending 40% cut in Medicare fees over the next couple of years.  Even if little else is done to correct the SGR formula, this forgiveness of past loans will completely alter the trajectory of future updates.  Coupled with the recommendation that part B drugs be removed from the formula (an adjustment worth $170 billion), we now project a modest increase over time.  However, no one is satisfied that the SGR as it's currently structured is accomplishing what it was intended for-to control volume and costs in the system overall.  The logical response for any given physician faced with diminishing fees is to increase his own volume of work.  This is exactly the opposite of what was intended and as a consequence, the SGR will never succeed.  

Revised plans are targeting what are perceived as the biggest growth areas in medical care: office based testing, minor procedures and high end imaging.  Reform will involve cutting and redistributing fees, re-aligning priorities, removing incentives, bundling fees, withholding payment for bad outcomes and rewarding value.  Current proposals to replace the SGR include substituting 6 different targets for the current monolithic structure (separate limits for primary care E&M, all other E&M, major surgeries, minor procedures, imaging and labs, anesthesia,etc). 

Although this new plan might bode well for some urology practices depending on the nature of any given individual office, the revised formula involves transferring funds to reward and support primary care which is   viewed as a specialty threatened with extinction by an array of economic forces.  As such, there is wide spread sympathy in Washington that differentially greater reimbursement must be given which, because of budget neutrality restrictions, will come at the expense of specialists.  Although we have argued that robbing surgeon Peter to pay family doctor Paul will have unintended negative consequences, Congress is set to implement this transfer in one way or another.

This asymmetric shift in funding may be done in various ways: bundled payments may be given to a hospital-based groups surrounding a major event such as cancer or open heart surgery (Events of Care), to an outpatient group responsible for managing chronic medical disease such as diabetes or CHF (Accountable Care Organizations) or physicians may be allowed to participate in savings derived from efficient cost effective treatments without violating kick back laws (gain sharing).  Each of these proposals to bundle payments threatens specialists since it gives over authority on how to divide up payments to someone with an inherent conflict of interest (do you really want your local hospital deciding your fee schedule?).  However, the most politically popular concept at present is for the Medical Home.

Viewed as a team focusing on integrated health care services emphasizing preventative care and chronic disease management, all of which is necessary to control costs, the Medical Home looks like a hybrid of the classic family medicine practice crossed with the gate keeper, capitated managed care model.  While few could argue that better coordination of care will improve quality and cut costs, shifting funds from specialty care to this structure will be detrimental to urology practices and recalls memories of what impact using gate keepers had on efficient specialty referral. 

Despite arguing that many urologists already serve as the "principle" (if not "primary") health care provider for many of their patients, proposed models for the Medical Home will not allow urology participation.  While we acknowledge the value of primary care and even support the concept of a Medical Home, we have argued that any increase in financial support should not invoke budget neutral offsets to other health care providers.  Congress intends to pay more to family physicians for services beyond the classic face to face episode, such as time spent on the phone coordinating care for their patients.  Who do they think is on the other end of that phone call spending equal time integrating treatment?  We are and we deserve equal consideration.

In another effort to realign priorities and remove incentives for what is perceived as over-utilization, Congress seems predisposed to closing out all participation in ancillary services.  As you know by now, an accommodation has been reached to allow most lithotripsy partnerships to continue, even using "per click" reimbursement.  Restructuring ESWL treatments to provide a "service" instead of renting equipment avoids Stark prohibitions.  Unfortunately, because of language in the law, this understanding does not extend to other partnerships such as laser, microwave, and cryotherapy units although a lawsuit has recently been filed in this regard. 

Similarly, rules prohibiting pathology and imaging partnerships have been modified to allow some participation as long as the arrangement meets legal criteria.  Unfortunately, urologists' continued use of in office imaging equipment continues to come under attack from organized radiology.  It is imperative that we remain alert to proposed legislation nationally and locally and make our case to legislators that since no one knows our patients better, we should retain control of any testing necessary for diagnosis and treatment.  This threat is especially important with respect to urology involvement with radiation treatment partnerships.  Radiation oncologists have repeatedly attempted to nullify Stark safe harbors by changing the definition of "ancillary services" (a legal term of art) in the AMA House of Delegates as well as in the halls of Congress.  We are hoping to open dialogue with them to show that their efforts will have negative results for their own members but much work remains in this respect. 

Space prohibits discussing many more challenges in detail.  However, it is important for the Section to note the amount of resources and energy now devoted by the AUA to health policy.  In addition to a much larger division with much more staff support and a robust committee structure involving many urologists from around the country, the AUA board of directors has made a clear and emphatic statement that they will continue to fund and emphasize these efforts. 

Out of the 2009 AUA budget of $39 million, although health policy related revenues only comprise $1.26 million, the health policy budget totals $5.935 million.  Funding lobbyists, supporting multiple committee activities, opening a new Washington D.C. office and expanding individual urologists' involvement, we are well positioned to address whatever new changes health care reform creates.

2009 COMMITTEE ON LEGISLATION REPORT
William Bonney, M.D.

This bill revises the definition of peer review by stating the goal of peer review is to determine qualifications for the practice of medicine.  It would also require peer review to be done in all medical settings including private practice offices with one physician.  CMA comment:  Peer review is better done at facilities where the majority of physicians have credentials.  This bill is also the subject of ongoing negotiations.
Referred to Senate Business & Professions Committee; 4/20/09.

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Health Care Reform--CMA Perspectives:

1. Tax credits and direct subsidies to low-income families
    . . then impose individual mandates to obtain insurance
2.  Outreach--enrollment of families already eligible for Medicaid and SCHIP
3.  Improve access: 
    Medi-Cal physician reimbursement --> wider physician participation
4.  Improve cost-efficiency (Health Care plans devote 85% of revenue)

Please see Attachment to this message:  CMA Perspectives on Health Reform

Take-home Message--Health Care Reform:
We as physicians must join this collaborative effort, take the lead, and protect a) the doctor-patient relationship and b) a healthcare system which allows independent, high quality practice with adequate reimbursement.   Problem:  we have not figured out how to organize ourselves and get this done.

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May 19th Special Election in California:
Health and Human Services budget

Vote 'Yes' on Proposition 1d:   To move $268 million from Tobacco Tax funds (1998 Prop 10) and place that money into HHS (Calif Health & Human Services) for children's health care (CHIP, Medicaid) and other services.

Physician reimbursement is a key outcome.

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Other Calif Legislature bills of interest
(including those sponsored or opposed by CMA)

 Please see Attachment to this message:   CMA Hot list.doc


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