Part A and Part B
When a beneficiary is hospitalized, Medicare pays separately for hospital services (Part A) and physician services (Part B). Because of their unique role in the hospital, most hospitalists receive payment through both Medicare reimbursement plans. “Physicians are never paid under Part A, but most hospital medicine groups receive some subsidy from their hospital, and, of course, that money originally comes from Part A,” Dr. Torcson explains.
Medicare Part A reimbursement applies to inpatient care in hospitals, critical-access hospitals, and skilled nursing facilities. It does not apply to custodial or long-term care, but it does help cover hospice care and some home healthcare.
Medicare Part B covers medically necessary services and supplies. Most beneficiaries pay a premium to receive this coverage, which includes outpatient care, doctor services, physical or occupational therapists, and additional home healthcare. Part B also covers nonphysician services and procedures.
Part B reimbursement is dictated by the CMS Physician Fee Schedule, which is released every year in the agency’s Final Rule (see “Medicare Modifications,” January 2009, p. 17). You may recall the scramble each of the past three years to urge Congress to avert a 10.6% cut in Part B payments to doctors.
“From the physician side, we still have this …hanging over our heads,” Dr. Torcson says. “Every year, we manage to avert a 10% cut in pay. Now we only have until this summer to block that cut again, unless there is a complete reform of how Part B is reimbursed.”
Congress Calls the Shots
Although CMS administers the Medicare programs and writes the checks, Congress sets the agency’s budgets and directives. Congress must pass into law every CMS initiative, including the Physician Compare Web site that publicizes PQRI data and reimbursement for follow-up inpatient telehealth consultations.
Congress is advised on healthcare issues by an independent agency, the Medicare Payment Advisory Commission (MedPAC). The 17-member MedPAC board advises Congress about payments to providers in Medicare’s traditional fee-for-service program as well as private health plans participating in Medicare. MedPAC also is tasked with analyzing access to care, quality of care, and other issues relating to Medicare. “They’re not a governing board,” Dr. Torcson says. “MedPAC clearly functions as an advisory panel. The final authority is through Congress.”
CMS Sets the Direction
In addition to putting money in hospitalists’ pockets, CMS plays an important role in setting nationwide trends for healthcare payment and policies. As the largest and most powerful payor in the U.S., the agency often acts as a model for other payors—namely, private insurance companies.
Dr. Torcson points to two historic changes in payment reform: “By 1983, there was a turning point when hospitals began getting payment through the DRG [diagnosis-related group] system. Private payors started following along.” And when the Medicare physician fee schedule was introduced in the 1990s, “private payors began basing their physician payments on the physician fee schedule.”
Private payors are watching CMS initiatives (e.g., PQRI and value-based purchasing) to see how physician payment develops in the future.
“CMS is powerful and it’s going to become more so,” Dr. Torcson predicts. “It’s going to continue to be a model of healthcare reform, with its focus on aligning quality and cost in concepts like value-based purchasing.”
For the time being, no one knows the exact shape U.S. healthcare reform will take or how fast it might happen. But one thing is certain: CMS will be at the forefront of changes that have a major effect on how hospitalists work, as well as how they are compensated. TH