U.S. Senate votes to delay ICD-10 and Medicare doc cuts

In a move that has far-reaching ramifications for the medical industry in Kansas and elsewhere, the U.S. Senate on Monday evening voted to delay for a year scheduled reductions in Medicare physician payments and postponed the implementation of medical coding changes known as ICD-10.

The U.S. House had approved the bill – the Protecting Access to Medicare Act of 2014 – last week. The Senate approved it, 64-35.

If the measure is signed into law, as expected, it would be the 17th time since 1997 that cuts in Medicare payments to doctors in accordance with the so-called Sustainable Growth Rate formula have been forestalled or altered by Congress. Doctor groups had pushed for a permanent solution to what has come to be called the “doc fix,” but that didn’t happen.

The Sustainable Growth Rate is a method used by the Centers for Medicare and Medicaid Services in an effort to control Medicare spending on physician services. Enacted by the Balanced Budget Act of 1997, it aims to hold the yearly increase in the expense per Medicare beneficiary to no more than annual growth in Gross Domestic Product. CMS sends a yearly report to the Medicare Payment Advisory Commission, which advises Congress on the previous year’s total expenditures and target spending. If the expenditures for the previous year exceeded the target, then payments are to decrease for the next year. On March 1 each year, the physician fee schedule is updated accordingly. But the update can be suspended or adjusted by Congress, which has been done almost routinely.

“It was a great lesson in how things work in Washington and illustrates some of the challenges that exist to solving problems” said Jerry Slaughter, executive director of the Kansas Medical Society, the state’s leading doctor group. “You don’t find anyone in Congress who doesn’t agree this SGR (Sustainable Growth Rate formula) should be scrapped … but with the environment there it’s very hard to take steps toward something to fix it.”

Slaughter said members of Congress and the various sectors of the health care industry reached general consensus on a plan to replace the formula, but no acceptable way was found to offset the costs of implementing it, which would have been about $130 billion to $150 billion over 10 years, Slaughter said.

Congressional “pay-go” rules require that any new spending be offset by cuts in other programs or in new sources of revenue.

“The 800-pound gorilla in the middle of the room was they didn’t have any explicit pay-for,” Slaughter said.

The same legislation would put on hold for another year the implementation of the ICD-10 medical billing codes that have been a concern to many physicians across the U.S., particularly those with smaller, rural practices. The new coding system has been scheduled to launch in October after a previous postponement.

Dr. Dean Bartholomew of Platte Valley Medical Clinic in Syracuse, Wyo., last week described the ICD-10 coding changes as “the coming tsunami” that could cost small practices up to $226,000 each to implement. The coding is used for billing and reimbursement by government health programs and private health insurance companies.

Bartholomew compared the changes to forcing a group of English speakers to switch to German more or less overnight.

Slaughter said many rural Kansas doctors had similar concerns.

“There’s a whole bunch of smaller physician practices that frankly just weren’t prepared for it,” he said. “They weren’t able to spend the money for it. It’s all very costly, tens of thousands of dollars for each practice.”

He said the costs of converting to ICD-10 are coming “on the heels” of federal requirements that doctors adopt electronic health records, which has been costly, time consuming and therefore difficult for many small practices.

The current medical coding system, ICD-9, has about 13,000 codes for various medical procedures and treatments. ICD-10 will have about 68,000 codes.