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Medicine Under Obama: The Impact for Ophthalmology

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As the new administration takes office this month, there seems to be a great deal of anxiety among ophthalmologists regarding the possibility of a single-payer system. Let’s take a look at how this could play out.

During the debates, neither candidate proposed universal coverage or a single-payer system to help cover the 46 million people who are still uninsured in this country. Why not? The reality is we cannot pay for those who are currently covered in public programs, so we will likely see payment reform before the government will tackle any substantive change in coverage.

The Ins and Outs of Health Care Legislation
While everyone tends to focus on the president’s stance regarding health care, it is actually the Congress, not the president, that designs and passes health care legislation. This means that, regardless of which candidate would have taken office, it is the policies favored by our predominantly Democratic Congress that will determine any reform proposals.

Party Health-Care Priorities Compared

 Democrats  Republicans
Consider Medicare to be a defined benefit Would like to limit the long-term growth of Medicare by changing it to a defined contribution
Prefer to expand public programs to cover people at risk or the uninsured Prefer to limit the growth of Medicare and Medicaid
Support Medicare fee-for-service Prefer Medicare Advantage (HMOs)
Try to expand preventive benefits Wish to restrict growth of new programs
Feel public programs are more efficient Feel markets are superior
Would allow Medicare to directly negotiate Medicare drug prices Would not allow Medicare to directly negotiate Medicare drug prices
Favor increased aid for low-income beneficiaries (50% of elderly with incomes less than $20,000; 28% without Medigap coverage)  
Both parties support more revenue for primary care and integrated chronic care

If we want to predict the future, all we need to do is examine the legislative activity of the last two sessions of the Democrat-controlled Congress. This will give us a pretty good idea of what will be included in any health care bills.

Looking Back at 2008
Two key pieces of health care legislation passed by the Democratic Congress will give us a pretty good idea what to expect in 2009. The first is the Medicare Improvement and Patient Protections Act (MIPPA), better known to physicians as the “Medicare fix,” passed last spring over President Bush’s veto. After years of cuts, freezes or minimal updates in Medicare payments under the Bush administration, MIPPA gave physicians a 1.1 percent increase for 2009, a 2 percent increase in 2009 and 2010 for the adoption of e-prescribing, and a 2 percent increase in 2009 and 2010 for all Medicare billings for compliance with the Physician Quality Reporting Initiative (PQRI).

The second significant change is the reversal of the White House’s decision to apply Medicare budget neutrality to the work RVUs (relative value units), instead of the conversion factor favored by the Academy and the AMA. This last change will result in an additional 1 percent increase for many ophthalmic codes. However, these combined 6.1 percent increases come with conditions attached.

The PQRI Bonus
In order to get the 2 percent PQRI bonus, ophthalmologists must successfully report on 80 percent of eligible patients for three quality measures. Now that many of the problems with the 2007 PQRI testing period have been resolved, offices should have little problem getting a bonus for 2009 and 2010. Also, the bonus applies to all Medicare-allowed charges for the year, not just the patients reported on. Further information is available in the Academy's PQRI section.

Why the persistence of quality reporting in both the public and private arena? Patients in the last 10 years have seen the percentage of first-dollar coverage insurance plans drop from 70 percent to a meager 3 percent. Meanwhile, their percentage of out-of-pocket costs has nearly doubled, from 22 percent to 43 percent. Understandably, they want to know what they are getting for their buck.

E-Prescription Adoption
The e-prescribing measure is the first sign that Congress recognizes that if they want doctors to adopt new technology in their offices, they will have to be paid for it. There is a 2 percent bonus on all Medicare payments for 2009 and 2010, a 1 percent increase in 2011 and 2012, and a 0.5 percent increase in 2013, followed by four years of penalties ranging from 1 percent to 2 percent.

It is quite simple to qualify if you receive 10 percent of your Medicare payments from office visits and use e-prescribing on 50 percent of patients seen in the office with a consultation, E&M or eye code. For more information, log on to Many of the software programs available are free.

Reversing Medicare Budget Neutrality
Every five years Congress mandates that CMS look at the Medicare fee schedule and adjust codes that are over- or undervalued. When the total payments for these five-year RVUs exceed $20 million (they always do), then CMS must make compensating cuts to maintain the size of the budget.

President Bush applied this budget-neutrality adjustment to the RVU instead of the conversion factor — over the objections of all physician groups. This dramatically helped the imaging industry. Fortunately for us, the Democratic Congress reversed this decision so more money will flow to physicians instead of to the industry.

Looking to the Future
All three of the initiatives described above will help physicians in the next couple of years while long-term payment changes are explored. Without payment reform, physicians face a 21 percent cut in payment in 2010.

So, what new methodologies are the health policy folks considering? There are three. First, the bundling of physician and hospital services is being considered in order to align physician and hospital motivation and to dampen excess imaging, testing, length of stay and consultations. Thank God there are few services we share with hospitals!

Second is the development of separate spending targets or conversion factors. Historically, surgical services grow at a much slower rate than the gross domestic product (GDP), cognitive services a little less than the GDP and all imaging and testing at much greater rates. Implementation of this policy will lead to long-term increases in surgical payments, smaller increases in office-based visits and steep cuts to office-based testing.

To help put this in perspective, consider this. In 1995, surgical services accounted for 65 percent of our revenue. In 2006, 35 percent of our revenue came from surgery and 65 percent from office testing and visits. This new initiative would reverse this long-standing trend.

The third item under consideration is the enhanced financing of the medical home. The medical home would pay primary-care doctors a hefty monthly management fee above their service billings fee for coordinating the health care of chronically ill elderly patients.

What We Can Expect
For the first time in years, the picture for physician payment under Medicare is looking up. Why? Historically, Democrats haven’t supported physician-focused programs, but they strongly favor fee-for-service Medicare. Since commercial insurers usually mirror Medicare payment policy, any improvements in Medicare fee-for-service benefit practicing physicians in both the public and private sectors.

Let’s just hope we realize these gains and see a beneficial impact from payment reform before our taxes are raised.

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About the author: William L. Rich, III, MD, is the Academy’s medical director for health policy. He is a comprehensive/cataract physician in Alexandria, Va., as well as a clinical instructor at Georgetown University Hospital.