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Congress still intent on fee schedules as budget focus shifts to 1987.

Congress still intent on fee schedules as budget focus shifts to 1987

House and Senate lawmakers continued work on budget reconciliation for the current fiscal year even as debate over 1987 proposals began to blur the outcome for key laboratory-related provisions.

Moving into the second week of March, Congress had yet to reach agreement on spending for fiscal 1986, which began Oct. 1. Many observers believed the triggering of automatic cuts required by Gramm-Rudman-Hollings had put the reconciliation process to rest. But a campaign by House Democrats made the outcome an even-money bet.

The lab package hammered out by conferees in late December called for pay caps on carrier-wide fee schedules, a moratorium on competitive bidding demonstrations, mandatory claim assignment for physicians, and a study of standards for physicians' office testing. The proposals got lost in debate over budget riders.

At press time, Congress faced a March 14 expiration of an extension to previous spending rules. It was still uncertain whether reconciliation would be approved, or another extension, probably until Sept. 30, enacted.

Lab association spokesmen portrayed either outcome as having certain positive effects. The reconciliation package could mean near-term revenue losses of 5 to 20 per cent but would remove some competitive advantages of physicians. An extension of the status quo would allow a scheduled fee update this summer which could help offset the automatic pay cuts already in effect.

One popular prediction is that lawmakers, who invested great effort in their compromises, will pass the lab provisions whether it be for 1986 or 1987. "I wouldn't be at all suprised to see them pop up again if reconciliation fails,' according to a spokesperson for the American Association for Clinical Chemistry.

Fiscal 1987 has, in fact, stolen much of the attention in Washington following presentation of President Regan's proposed budget on Feb. 3. No one expects Congress to rubber-stamp it, but neither has it proved "dead on arrival,' as some had predicted.

One of the biggest bones of contention is the trimming in health care. Approximately 25 per cent ($8 billion) of all projected savings would come from health-related programs. Health and Human Services Secretary Otis Bowen, M.D., described the cuts as "keeping Medicare and Medicaid outlays in check without compromising on quality care.' Estimated savings for those two programs alone are $5.4 billion in 1987 and $55.4 billion over five years.

Payments to providers would account for 60 per cent of the cuts, beneficiaries and the private sector about 16 per cent each, and the states 8 per cent.

Medicare reimbursement to clinical laboratories would be frozen from Oct. 1, 1986, to Oct. 1, 1987. Further, reasonable cost limits would be placed on hospital outpatient testing after the current lab fee schedule expires in July 1987. Among other Reagan budget proposals:

Operating cuts at HHS agencies of $112 million at the National Institutes of Health, $14 million at the Centers for Disease Control, and $16 million at the Food and Drug Administration.

Approximately $450 million in savings by holding projected-hospital payment increases to 2 per cent. Another $1.6 billion would be sliced by halving Medicare medical education payments. Capital payments would be folded into the prospective payment system during a four-year transition period.

A lid to keep scheduled increases in Medicare physician fees to less than 1 per cent. Projected savings: $432 million. Specific cuts for cataract and coronary bypass surgery.

An increase in Medicare Part B beneficiary premiums from the current $16.90 to $17.80, and to levels paying for 35 per cent of program costs by 1991. Deductibles would change from $75 to $100 for the year. Thereafter, deductibles would increase by the same amount as the Medical Economic Index. Estimated new revenues for 1987: $1 billion.

A cap on Medicaid payments set at $23.6 billion--about $1.3 billion below projected spending for the year. Any subsequent increases would be limited to inflationary adjustments.

In the House, Democratic leaders are whispering intentions to force their GOP colleagues to a vote on some of the most criticized proposals. Rep. Fortney Stark (D-Calif.), chairman of the House Ways and Means health panel, has already led complaints that the budget is being balanced on "the backs of Medicare beneficiaries.'

Meanwhile, Senate budget leaders are reportedly at work on a bipartisan alternative to the President's plan. One spokesman, Sen. Dave Durenberger (R-Minn.), maintained Medicare has "bled $38 billion during the past five years in the name of budget cuts.' He announced plans to fight the proposed "arbitrary slashing.'

Lab officials suggest a too-detailed budget analysis would merely be an academic exercise, because of anticipated compromises. Some, however, believe it's important to look at elements beyond the potential direct effects on reimbursement.

Dr. Mark Birenbaum, associate administrator of the American Association of Bioanalysts, comments: "The most critical implication in the budget proposal may be the effects on regulatory agencies. Some of the cuts at CDC, for example, would be significant, and they could affect the way our industry is regulated.'

Birenbaum further suggests the proposed agency budgets reflect an Administration desire to slow down the payment cycle of Medicare fiscal intermediaries and carriers. An 11- to 15-day delay is projected from Gramm-Rudman cuts alone, but no one at the Health Care Financing Administration appears over-concerned.

Kevin Moley, HCFA associate administrator for operations, explains that the first round of cuts reduced appropriations for the 91 Medicare contractors by nearly $60 million. "I feel that level is tight but livable,' Moley explains. "Obviously, others disagree. Our contractors are telling us they will feel the pinch.' The anticipated result is that they will not be able to assign as many staffers to claims handling, thereby causing the delays.

The payment cycle slowdown will stretch to an 11-day average by Sept. 30. But Moley predicts that when the new fiscal year begins, the delay may be extended to 15 days "unless a decision is made to use a $50 million contingency fund that is in the President's budget proposal.' That decision would be a political one not controlled by HCFA.

The Medicare official conceded that contractors "often pay too fast from our point of view, because we don't get a chance to take advantage of the float.' He insisted that most payments are made in less than 30 days; thus he said the average payment cycle would likely move from about 23 days to 34 to 38 days.

Molely dismisses complaints about late payments as strictly apocryphal. "For example, I got a call the other day from a Pennsylvania Congressman who had received complaints about late Medicare checks. Yet he represents an area in which Medicare payments are the fastest in the entire system,' Moley said.

Just when Congress and the health agencies were beginning to come to grips with the implications of Gramm-Rudman, a court decision declaring the law unconstitutional came along to further complicate matters. The unanimous ruling by a Federal court related to the role of the General Accounting Office in overseeing the automatic cuts when Congress fails to hit budget targets.

Judges ruled that the cuts, which became a reality March 1, were invalid. But the order is stayed pending a review by the Supreme Court, scheduled for completion by midsummer. Some analysts say an escape clause in the law, permitting Congress to assume the role of GAO, would dampen the impact of the Court review. Even if the judicial slapdown sticks, it is uncertain whether laboratories would be entitled to a reimbursement of payment reductions.

CAP again close to deemed status award

At this writing, it appeared the College of American Pathologists was close to winning final deemed status approval for its Laboratory Accreditation Program. The designation would make CAP accreditation equivalent to that of Medicare's.

The issue appeared resolved in a letter to the CAP from departing HCFA Acting Administrator C. McClain Haddow. But Haddow later changed his decision "upon further reflection and upon the advice of counsel' (see Washington Report, March MLO).

Sources indicated that other HCFA officials have further reviewed the matter and were close to making the designation final. Non-physician lab groups had pressed for a period of public comment, objecting to the CAP requirement of physician directorship for hospital laboratories.
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Publication:Medical Laboratory Observer
Article Type:column
Date:Apr 1, 1986
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