Report on Medicare Fee Updates & Health Policy Report By Jeffrey Kaufman

1. Medicare Fee Updates: The current Sustained Growth Rate formula, if unaltered, will cause fees to decrease 10.6% on July 1, 2008 and another 5.4% on January 1, 2009 (ultimately falling a full 40% by 2013). Everyone in Washington recognizes that the formula is flawed and such dramatic cuts cannot go forward but they lack the political will to restructure the current program. The cost attached to simply freezing all fees and "scrubbing" pay back for the past several years of freezes or small increases is estimated at $300 billion. Such costs must be accounted for elsewhere in a budget that is already broken from Iraq and other economic challenges. The best of several current pieces of legislation to address the short term challenge will freeze the current rate (0.5% over 2007) for the remainder of this year and provide another 1.1% raise in 2009. This 18 month extension will allow Congress to reconsider the fundamental formula underlying updates after the upcoming election. Unfortunately, although we were promised at the April Joint Advocacy Conference that a fix would be voted on before the drop dead date at the end of June, the latest word from Rep. Pete Stark, chair of the House Ways and Means Health subcommittee is that the Senate is dragging its feet and may not have legislation back to the House before July 1. We are hoping that the chairman of the Senate Finance committee is successful taking this vote directly to the floor and having a bill signed by Bush in time but there is a great chance that we will have to rely on a bill passed after the cut off date allowing retroactive relief. This very important issue is still very much up in the air. At the same time, there is a great deal of pressure in Washington to pay more to primary care providers at the expense of specialists. If they are successful, any increase in the overall Medicare payment structure may be more than offset by budget neutrality adjustments causing a significant net loss to urology.

2. The Recovery Audit Contractors hired by CMS as bounty hunters to audit past Medicare payments up to 3 years previous caused California urologists a great deal of stress last summer when they focused on prior LHRH payments. We were successful in defeating those demands and working with CMS to improve the program. However, the program is now expanding to cover all 50 states with authorization to target any past payments up to 3 years old in an effort to demand reimbursement to CMS for any charges not upheld under audit. This program is extremely onerous and threatening to physicians who have been responsible for the smallest percentage of money returned (over 85% of recovered money coming from rehabilitation and acute hospitals). Legislation (HR 4105) from Rep Lois Capps, D-Santa Barbara, is pending that would put a one year moratorium on the program to allow CMS and Congress time to reconsider whether it is functioning as designed. Such a moratorium would provide us a window of opportunity to lobby to have physicians excluded from its authority or at least to reduce some of the more aggressive aspects.

3. Although pressure from federal agencies for urologists to demonstrate certification of training and expertise before performing various imaging studies has lessened, it continues from private payers. The AUA has been successful in convincing payers that residency programs and post-graduate training seminars are sufficient to allow our members to continue to perform those studies necessary to the practice of urology. Pat Fulgham, MD, working with AUA leaders and the AUA Health Policy Committee has created programs on ultrasound which are now acceptable to Blue Cross/Blue Shield carriers. We expect more discussions with other private carriers and an expanded series of post-graduate courses to certify member urologists to continue to perform these studies and qualify for reimbursement by private and government payers. However, pressure continues from organized radiology interests at the national and state levels to prevent anyone but a board certified radiologist from providing any type of study. Other specialists are similarly busy fighting to protect what they consider to be their "turf". Pathologists and radiation oncologists have been outspoken with respect to urology groups organizing to retain more control over their patients in these areas. The AUA health policy committee has been extremely active addressing these challenges.

4. The concept that government money spent on health care must be based on Value Purchasing is behind continued efforts to expand Pay for Performance programs. Although the Congress is not very interested, the Senate has taken it on faith that such programs are necessary to controlling future medical costs and insuring that quality care is rewarded (or that poor quality care is not reimbursed). CMS has issued an expanded list of medical events for which no increased payment will be made (such as post-operative DVT, catheter caused urinary tract infections, post-operative wound infections, etc). At the same time, PQRI programs have expanded from last year to this and on to 2009. These programs demand reporting of performance that will allow government auditors to alter future payment schedules in order to reward what they consider quality outcomes (and presumably financially penalize those they do not value). David Penson, MD from our section (the AUA's first Gallagher Health Policy scholar), has led AUA efforts to go out front in developing appropriate criteria that will keep urologists in charge of quality assessment in those areas within our specialty.

5. CMS has reorganized Medicare administration in an effort to streamline their lines of authority and increase efficiency. This has led to the creation of MAC regions (Medicare Administration Carriers) which are now being organized to meld several states into larger, coordinated jurisdictions. California, Nevada, Hawaii, Guam and the Marianas islands are now incorporated in the new J-1 MAC administered by Palmetto out of South Carolina. Transition efforts are underway in preparation for the September 1 start up date. Our new J-1 medical director is Arthur Lurvey, MD who has worked closely with California urologists for many years in his previous capacity as medical director for NHIC, California's Medicare administrator. Payment policies that differ from one state to another are currently being reviewed and reconciled to provide more uniform coverage throughout the MAC. Urology advisors to Medicare are involved and offering advice on appropriate policy decisions. We have been assured that we will continue to have an advisory role in new policy decisions.

6. Please find attached our latest preliminary agenda for the upcoming Socioeconomic Forum in Monterey. We have attempted to cover a wide range of issues of great interest to our members in this time of turmoil, increasing overhead demands and falling reimbursement. I will present more information on the nature of the presentations at the Orlando board meeting. Representatives from our section have been very much involved in state, regional and national discussions. We continue to work very closely with the AACU and various AUA committees on these issues. As always, I am available and eager to discuss any aspect of urology health policy you may question.

Respectfully submitted,

Jeffrey Kaufman M.D., F.A.C.S.
Chair, Health Policy Committee