Professional Radiology Inc.
Cincinnati, Ohio 45223
February 27, 2002

Ms. Allison Giles
Chief of Staff
US House of Representatives
Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC  20515

Dear Ms. Giles:

Attached is a submission for the record to be included in the February 28, 2002 Subcommittee on Health Hearing on Physician Payments.  This letter represents the views of the President Elect of the Alliance Physicians and Surgeons, speaking for 1250 Cincinnati physicians, the Ohio State Radiological Society representing 150 Diagnostic Radiologists and Radiation Oncologists, as well as the members of Professional Radiology, Inc., a 21-physician radiology group from the Christ and Jewish Hospitals in Cincinnati, Ohio, who are also members of the Health Alliance.

Sincerely,

Frank E. McWilliams, M.D.

Professional Radiology Inc.
Cincinnati, Ohio 45223
February 27, 2002

The Honorable Rob Portman
Member of Congress
238 Gannon Building
Washington, D.C.  20515
FAX:  c/o Mr. Tim Miller
(202) 225-1992

Dear Rob:

Thank you very much for inviting me to attend the Medicare information meeting with Mr. Tom Scully on February 22, 2002.  I found the exchange positive and Mr. Scully an eminently reasonable, intelligent man with a good grasp of CMS services, as one would expect.  I was interested in the comments of all that spoke, and wanted to supplement what was stated at the meeting with some of my own comments, particularly in regards to physician reimbursement and mammography screening, as these issues were not perhaps as definitively explained by the participants as I think they should be.  It is my understanding that the Health Services Subcommittee in the House is meeting this week, according to Mr. Miller, and hopefully these comments, if helpful, could be forwarded.

PHYSICIAN REIMBURSEMENT:

CMS indicated that between 1998 and 2001, the cumulative update for physicians was 15.9%, compared to a 9.3% increase in medical inflation.  This calculation ignores certain technical adjustments that reduce the conversion factor by a total of about one percentage point between 1998 and 2001.  Furthermore, and more importantly, it focuses on the most positive four-year period in the target’s history, and completely ignores six of the ten years that physicians have been under an expenditure target.  The physician payments were cut in three of the missing years, 1992, 1996 and 1997, and were well below medical inflation in a fourth, 1993.  Therefore, over the full ten years under an expenditure target, the cumulative change in physician payment was 18.5% compared to a 26% increase in medical inflation.  Average annual increase in payments was 1.7% per year for physicians, while medical inflation averaged 2.3% per year.  If one includes inflation, adjusted physician’s reimbursement over that period of time is minus 13%, with all hospital and institutional reimbursement staying at 0% with no increase or decrease relative to inflation. 

MS also claimed that over the long haul, physician payments and the CPI have risen by nearly identical rates, with one going up on the average of 3.2% and the other by 3.3%.  To understand this assertion, it is important to understand that Medicare officials essentially issue two different conversion factor updates every year.  The first (-4.8% in 2002) is based just on the Medical Economic Index.  The second conversion factor as required by the expenditure target (-5.4% in 2002) makes additional negative budget neutrality adjustments, including one to offset volume increases that CMS assumes will occur as physicians attempt to make up for the reductions in the relative values for some services.  This significantly impacts physicians in the service area, such as Radiology, where examinations are requested by other physicians, and there is no control by the radiologist over the volume.  This results in a skewing of the relative value units, which we have all previously negotiated and agreed to in past years, and places an undue burden on those physicians who do not control the service demand.  It also does not take into account the growing Medicare population or patient demands.

The 5.4% across the board reduction in Medicare physician payments is indefensible and will create a political fire storm.  The practice policies that are beyond the control of physicians have increased dramatically.  Medicare has imposed excessive administrative burdens and unfunded mandates on physicians in the past, and is now going to compound the situation with and an across the board cut.  In fact, in some services such as Radiology, the cut is not 5.4%, but is estimated between 12 and 14%.

In Cincinnati, this Medicare fee schedule impacts dramatically the reimbursement climate.  As Mr. Scully pointed out, the average Medicare recipient receives $6,800 in benefits across the country, whereas in Cincinnati it is $4,800, and in other areas it is $8,400, representing a significant discrepancy.  This discrepancy is compounded by the fact that the high HMO penetration in the Greater Cincinnati area utilizes Medicare as a benchmark.  Therefore, Cincinnati physicians, again at a reimbursement rate that is 25% below the national average for Medicare, are penalized further by the insistence of the HMO’s on utilizing those figures as the baseline.

In Cincinnati, there are numerous physicians that are leaving the community.  In particular, we note that cardiovascular surgery is significantly understaffed in the community, as well as neurosurgery.  In Radiology, we are unable to recruit physicians who do not have significant ties to the Greater Cincinnati community and who wish to return in spite of a significant penalty in initial and ultimate reimbursement.  A group of oncologic surgeons with which I am familiar, has been trying for three years to recruit an additional surgeon.  One individual who came and interviewed demanded a salary that was greater than any of the senior associates in the medical corporation.  Of course, they were unable to adequately answer his salary demands.

Across the board, as Mr. Scully indicated, this creates a downward spiral in employment opportunities and institutional viability, as well as in the general level of medical care.  I am hopeful, Rob, that you can address these inequities in this session of Congress, as in some instances, physicians are really on the economic bubble and may have to bail out on the Cincinnati community and move elsewhere.  I am hopeful that our parents and ourselves as we age, will have an excellent medical environment in which to receive care.  I am sincerely concerned that this reimbursement discrepancy will lead to a lower tier of care in the long run, as it seems to have in the short run in certain areas, for our future.

Finally, it appears to me that we are reaching a crisis in the Medicare program.  I believe that the President’s proposal for phased-in prescription coverage for the poorest seniors is an appropriate first step.  I also believe Mr. Scully’s comments that Medicare needs to be overhauled to be more of an insurance plan with co-payments, and follow the insurance model is an appropriate one. We find often that families insist on heroic measures for their elderly family members that appear to be related to their complete desensitivation from financial responsibility.  This often leads to patients receiving extraordinary heroic care in the last waning moments of their lives, which often does not provide any benefit to the patient, but only prolongs suffering.  A reasonable economic model, I believe, would help reign in these excesses.

Rob, as always, I appreciate your listening to my concerns as a friend and constituent, and as a practicing Radiologist in the Cincinnati community.  In my new role as a member of the Board of Trustees of the Health Alliance, and as President-Elect of the Alliance Physicians and Surgeons, as 1200 member group of specialists and primary care physicians, I am in a position to speak for numerous physicians.  In addition, in my position as President-Elect to the Ohio State Radiological Society, I represent the views of 950 radiation oncologists and diagnostic radiologists who practice in Ohio. I look forward to any way to serve you to provide time, expertise, or counsel regarding these complex issues in the healthcare arena.

As always, those of us in the Cincinnati community feel proud and privileged to have you representing us in the United States Congress.

With fondest regards,

Frank E. McWilliams, M.D.