MEDICAL INDUSTRY NEWS

House Bill Would Eliminate SGR-Based Payment Systems by 2010

Experts Answer 101 Tough Practice Management Questions
(MGMA - Medical Group Managers Association)

Towards the Electronic Patient Record (TEPR) Conference Planned for May 17-21, 2008

House Bill Would Eliminate SGR-Based Payment Systems by 2010

By James Arvantes 7/20/2007, reprinted from American Academy of Family Physicians

A soon-to-be introduced House bill would eliminate the sustainable growth rate, or SGR, formula by 2010, while providing slight increases in Medicare physician payment rates for the next two years as an alternative to steep payment cuts called for under the SGR formula.

The House Energy and Commerce Committee and the House Ways and Means Committee have drafted legislation to reauthorize the State Children's Health Insurance Program and have included a provision in that bill to repeal the SGR and provide a 0.5 percent increase in physician payment rates under Medicare in both 2008 and 2009, according to Kevin Burke, director of government relations for the AAFP. This proposal would negate a 9.9 percent cut in physician payment rates in 2008 and another 5 percent reduction in 2009 called for under the SGR formula used to determine Medicare physician payment levels.

"We're particularly pleased that this year Congress is attempting to address this payment problem early to give family physicians the chance to plan for next year," Burke said.

The SGR-based system relies on aligning actual spending rates with specified expenditure targets to determine Medicare payment levels. In the past six years, spending has exceeded targeted rates, triggering steep reductions in physician payments that have been averted only by last-minute congressional intervention. Without congressional action, use of the SGR is projected to cause a 40 percent reduction in physician payment rates during the next eight years.

The AAFP and other physician organizations have repeatedly called for an immediate repeal of the SGR, but that may not be economically or politically feasible. Immediate elimination of the SGR could cost as much as $318 billion, according to the Congressional Budget Office. The estimated costs of preventing the SGR reductions during the next two years, along with the two successive 0.5 percent increases, would total more than $30 million, Burke said.

The draft legislation also includes the following:

• inclusion of two primary care medical home demonstration grants -- one of which would provide funds for patient-centered medical homes that serve underserved minorities or rural patients, and another that would require applicant practices to use advanced health information technology with electronic health records to collect aggregate data on best treatments;
• a reconfiguration of the Medicare payment formula into six categories with their own individual expenditure targets and conversion rates;
• an increase in the expenditure targets for primary care and preventive services of at least 3 percent above the gross domestic product, a provision that indicates the committees are specifically trying to increase payments to primary care physicians, according to Burke;
• creation of a new advisory committee to determine what services are overvalued and make recommendations to HHS to bring payment in line with appropriate values; and
• a provision that would provide physicians with feedback about their usage and practice patterns, with comparative data presented by region.

The AAFP, in a letter to the chairs of the Energy and Commerce Committee and the House Ways and Means Health Subcommittee, praised both committees for their "response to our request for a positive update for at least the next two years," and for "proposing to actually pay for this increase in the current budget."

"We understand the great fiscal pressure that the Congress is working with and the expense involved in resolving the problems created by the SGR," the letter says. "But we would urge the committees to increase the stipulated minimum rate in light of the several years of frozen payments that physicians have experienced."

In the letter, the AAFP also urges the committees to "consider an accelerated use of the patient-centered medical home as a payment mechanism to control costs and improve quality."

"This would include the use of a care management (per patient per month) fee to the patient's qualified medical home in addition to fee for service," says the letter. "Important data and experience demonstrate that this care management fee will not require 'new money' but rather would be covered by savings elsewhere in the system over time."

Reprinted from American Academy of Family Physicians. For information about the ACFP Annual Conference (Oct 3-6, 2007-Chicago) and other ACFP News: www.aafp.org.

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Experts Answer 101 Tough Practice Management Questions

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Question 20: I am trying to evaluate the pros and cons of a centralized vs. decentralized billing office. What are your thoughts? Many practices and other businesses prefer centralized billing offices, believing that economies of scale will lower overall costs compared to having several separate offices. Other benefits of centralization include: Standardization of processes, data collection, and reports; Development of expertise with the increase of employee specialization; Sharing of knowledge within one office; Improved patient relations with one location offering answers to all billing questions; and Cross coverage when needed.

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There are disadvantages to centralized billing offices. The process may suffer due to decreased interaction between billers and providers, which is important in the specialty practices, such as oncology, with complex billing issues. As the billing office grows in size, the complexity may affect economies of scale. Larger information systems may be needed, costing more, and employees may feel trapped in a limiting system of specialization.

Elizabeth Woodcock, MBA, FACMPE, and Loc Nguyen compared the operating costs and collections of practices with centralized billing offices with those of decentralized ones (see table on next page). Those with centralized operations had lower business office expenses than those without. However, collections took longer in centralized offices, and the collection percentages were mixed. Their conclusion was that a hybrid centralized/decentralized billing office may be best, “allowing the practice to capture the economies that are possible while retaining the relationships, communication, productivity, and control that are essential to success.”

Comparison between decentralized and centralized billing offices

Whichever model you choose, remember that all billing offices, whether centralized or decentralized, require clear procedures, quality control, and appropriate performance goals to be successful.

A CLOSER LOOK… Fact box

Important Note: Arrangement of the 101 questions is by competency domain as identified in the Body of Knowledge for Medical Practice Management, developed by The American College of Medical Practice Executives, the certification body of MGMA. The domains are: Business and Clinical Operations; Financial Management; Governance and Organizational Dynamics; Human Resources Management; Information Management; Planning and Marketing; Professional Responsibility; and Risk Management.

Every medical practice executive will find answers to some very pressing and frequently asked questions of their colleagues. Executives will also glean knowledge and resources from this title, either for help with an existing issue in the practice or for a problem that might soon require a response.

Reprinted from Medical Group Managers Association. Be sure to attend the MGMA Annual Meeting, October 28-31 2007, Philadelphia. For more information: www.mgma.com.

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Towards the Electronic Patient Record (TEPR)
Conference Planned for May 17-21, 2008
Broward County Convention Center, Ft. Lauderdale, FL

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Nearly 24 years ago, Medical Records Institute launched the TEPR conference, Towards the Electronic Patient Record, with fewer than 500 attendees. At that first TEPR, most people believed that "every doc" would be using an electronic patient record within 5 years. As TEPR continued year after year, the number of attendees grew and the issues surrounding EMR development and adoption turned out to be more complex than people had thought. Now, with a steady attendance of several thousand health informatics experts from all domains, TEPR has become the essential annual conference for anyone considering, selecting, implementing, maintaining, or improving EHRs or EMRs.

TEPR 2008 is a must for every physician, nurse, hospital executive, and health information management professional. TEPR is widely acknowledged as offering the best educational program in healthcare IT. And after 24 years, developments such as pay-for-performance, and quality patient safety improvements through EHRs have put an urgency on EMR implementation. Likewise, the creation of healthcare communities and networks, new consumer/personal health information systems, revolutionary new industries, development of completely new technologies, and regional and national efforts demand immediate attention as they will affect competitiveness, quality of patient care, and effectiveness of healthcare delivery throughout the industry.

The TEPR 2008 program will offer approximately 15 parallel sessions each day, including:

• Hospital IT Strategy Challenge
• Ambulatory Care
• Technologies
• Nursing
• Pediatrics Day and other Specialty Programs
• Best Health Community Approaches

In addition, TEPR will continue to offer important opportunities to see and hear about EMR systems through its

• EMRCompare^SM Demonstrations of leading EMR Systems
• TEPR Awards Program
• Exhibits of over 150 products

Plan Your TEPR 2008 Participation Early and Save!
Contact: www.medrecinst.com/conference/tepr/index2.asp

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