Special report of the joint committee on government relations

REPORT

Special Report of the Joint Committee on Government Relations Jack M. Matloff, MD Chairman, Joint Government Relations Committee

he Society of Thoracic Surgeons (STS) a n d The American Association for Thoracic Surgery, (AATS) share the responsibility for a Joint G o v e r n m e n t Relations Committee. All of the m e m b e r s of the committee* consider it an honor to be of service to our specialW in this way. It has also b e e n a pleasure over the past two years to work with the respective Presidents of these organizations, Dr Denton Cooley, Dr Aldo Castaneda, Dr Benson Wilcox, and Dr Robert Wallace, as well as their officers a n d our business managers. Robert Wilbur, working in our W a s h i n g t o n office, has been a constant companion in this journey, and his knowledge of our affairs is a critical resource to our professional organizations. From time to time, the m e m b e r s h i p s have received mailings from us relative to specific ongoing issues affecting cardiothoracic surgery. At this time, our leadership believes that an overview is indicated.

T

The Government R e l a t i o n s C o m m i t t e e ' s O n g o i n g Agenda This report is being structured according to the following six issues, which broadly encompass the ongoing agenda of the Joint G o v e r n m e n t Relations Committee: Participation in the political process Cardiothoracic surgical r e i m b u r s e m e n t Medical liability reform Advocacy for biomedical materials and devices R e i m b u r s e m e n t for medical services associated with the use of investigational devices Strategic p l a n n i n g We have advocated and will continue to advocate to our specialty's leadership a strategy of dealing with the changes that are affecting the health care e n v i r o n m e n t in general, and cardiothoracic surgery in particular, that is based on the concept that physicians must become involved in the political processes that underlie much of the change that is occurring. Five initiatives have been identified Presented at the Thirty-FirstAnnual Meetingof The Society of Thoracic Surgeons, Palm Springs, CA, Jan 30-Feb 1, 1995. Address reprint requests to Dr Matloff, 51I S I,ucerneBlvd, Los Angeles, CA 90020. *Joint Government Relations Committee 1994-95: Drs Jack M. Matloff (Chairman), Tea E. Acuff,WilliamA. Baumgartner,MortimerJ. Buckley, Timothy J. Gardner, WilliamA. Gay, J. Donald Hill, Robert W. lamplis, Christopher T. Maloney,DouglasJ. Mathisen,John E. Mayer,Jr, Joseph S. McLaughlin, Robert Sade, Hugh E. Scully, Richard J. Shemin, Alan M. Speir, VictorF. Trastek, Robert M. Vanecko,ArthurC. Beall,Jr, George C. Kaiser, SidneyLevitsky,and George E. Miller,lr. © 1995 by The Society ot Thoracic Surgemls

through which cardiothoracic surgeons can and m u s t become involved. The newest, most exciting concept, known as the Alley-Sheridan Awards, was introduced at the 1995 STS meeting. These awards are to be competitively offered for a variety, of program proposals that include attendance at university executive courses on m a n a g e m e n t , i n v o l v e m e n t with database courses in specified locales, one-year degree-based study opportunities, and support for symposia and other educational venues in association with currently scheduled national meetings. Among our membership, there is a group that can be characterized as being informed political constituents. They are supporters and even friends of Congresspersons, some of whom are on key Congressional committees. Knowing who a m o n g us has such access is a continuous process that needs to be updated, ideally every two years. Being able to directly and personally communicate with key Congressional m e m b e r s has b e e n a very helpful strategy, especially as health care reform played out over the past two years. Coalitions of special interest groups have also b e e n important. To date, we have participated in a n u m b e r of these that seem to espouse tenets that are important to cardiothoracic surgery. We have not, to date, tried to develop a coalition to specifically represent issues that are solely in our domain. This is a very important approach, because it is based on the concept that diverse societal elements do share c o m m o n beliefs a n d goals. All too often in the past, we in medicine have b e e n perceived as being too narrowly oriented a n d focused, almost to the point of being xenophobic, to appreciate the importance of such a strategy. Time a n d experience have indicated that the broader the coalition's representation, the more effective is its activity. Advocacy for political action committees is not what one would consider to be politically correct today, especially in view of what I have just said. But the fact is that special interest groups are the reality of our political process, and I do not see that changing, even with a newly charged Congress, in the near future. Currently, it is the American Medical Association or nothing, and clearly, they do not represent specialty practices. What we need to do, through our professional associations, is to reevaluate our traditional, perceived roles a n d reassess our tax status to effect a change in this direction. The development of a political action committee continues to be an evolving process, one that your committee believes we will eventually embrace. Finally, there is the ultimate initiative, ie, to r u n for Ann Thorac Surg 1995;60:740-3 • 0003-4975/95/$9.50 0003-4975(95)00592-9

Ann Thorac Surg 1995;60:740-3

REPORT MATEOFF JOINT COMM1TFEE ON GOVERNMENT RELATIONS

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Table I. Medicare Reimbursement for Corona~ Artery Bypass Vein and Arterial Conduits, 1987 to 1995" Procedure

1987

19896

1990

1991~

1992d

1993~"

1994

1995

Veins only Arterial + veins

4,101

3,786

3,405

3,025

2,514 ( 39%)f

2,451 2,471

2,561 2,601

2,726 2,776

A v e r a g e of two to 5 bypass grafts; n u m b e r s are expressed in dollars, t~ Last year of prevailing and customary. * Two years of adjustments for overvalued procedures 1990 to 1991. d Beginning of Resource-Based Relative Value Scale. Percentage decrease from 1987 through 1992, for veins only. ¢ Initiation of CPT code for arterial conduits; prior to 1993 venous and arterial conduits were not differentiated, f Percentage decrease for five years, 1987 to 1992, for vein conduits only. No adjustment for inflation.

political office. Today, five m e m b e r s of Congress are physicians. Our own Dr William Frist, who spoke at the recently completed Postgraduate Course of our 30th A n n u a l Meeting, is a most important new m e m b e r of the Senate, not only because he preempted James Sasser, a multiterm Senator who would have been Senator Mitchell's successor as Senate Majority Leader, but because he demonstrated in his campaign that he was not a oneissue candidate. It would not surprise me if, after two terms, we might be talking about presidential potential! Although we wish that this were not so, socioeconomic and political realities dictate that REIMBURSEMENT FOR CARDIOTHORACIC SURGICAL SERVICES has to be a primary focus of our g o v e r n m e n t relations program. The ability of cardiothoracic surgeons to continue to provide the highest quality of patient care depends on adequate reimbursement, both now and for the next generation of surgeons. Unfortunately, the reality is that health care reform focused p r e d o m i n a n t l y on costs, a n d therefore on economic principles. This has resulted in a scenario where we are being converted from a prqI:ession to a business. Consequently, we are increasingly being regarded with a " b o t t o m line" mentality, and our c o m m o n d e n o m i n a t o r has become the dollar value of medical services. How we perceive a n d m a n a g e change will determine what our future will be. Be aware that business and medicine have different perspectives regarding c h a n g e - - i s it an opportunity for profit, or for better patient outcomes? Are these mutually exclusive perspectives? As you struggle to resolve this difference in your minds, be aware of a recent Wall Street Journal [1] article that indicated that health m a i n t e n a n c e organizations in this country are now sitting on a $9 billion reserve. That money, in the past, would have b e e n used for individual patient services, albeit 1 would be the first to point out that a percentage of these might have been excessive, defensive, or unnecessary. For that, we are solely responsible for not having monitored and policed our own professional activities. Now someone else, using a new system--managed care--has filled the v a c u u m we allowed to be created. With the b u r g e o n i n g of this business mentality, we will almost certainly, in the future, have to look more closely at the role of g o v e r n m e n t in health care. Traditionally, that role has b e e n to legislate the groundrules and to protect the vulnerable. G o v e r n m e n t has exercised much of its responsibility through p a y m e n t of 43% of health care costs. This passive role has become much more aggressive a n d interventional with the passage of OBRA 1989 and 1990, the O m n i b u s Reconciliation Acts:

The O m n i b u s Budget Reconciliation Act of 1989 A Medicare Fee Schedule Resource-Based Relative Value Scale Hsiao/Harvard, Abt, or " o t h e r " Medicare Volume Performance Standards Limits on financial liability of Medicare beneficiaries through balanced billing A Recalculation of Practice Expenses A Five-Year Review of the Medicare Fee Schedule The O m n i b u s Budget Reconciliation Act of 1990, P.L.101-508 1990 Across the Board P a y m e n t Reduction, 2% 1991 No Update (MEI) in Customary, Prevailing Charges 1991 Assistants at Surgery Reduced to 16% 1991 Overvalued Procedures Reduced Again by Half of A m o u n t 1991 U n s u r v e y e d Procedures Reduced 6.5% 1991 Global Surgical Fees, July 1, 1991 Through these, by setting in place the Resource-Based Relative Value Scale as the basis for a Medicare Fee Schedule, a n d by establishing Volume Performance Standards, the federal g o v e r n m e n t has in fact established the basis for the p a y m e n t of all medical services. The s u b s e q u e n t ratcheting down of Medicare fees has b e e n so successful that the insurance industry in general has b e g u n to "follow the leader." With this increasing gove r n m e n t a l involvement, and the need to get to the bottom line, interest groups have become more, not less, involved in things medical; hence our emphasis on a political action committee. Given this change in orientation, how have we fared with regard to Medicare r e i m b u r s e m e n t ? O u r frame of reference (Table 1) should be the average 39% decrease in r e i m b u r s e m e n t for cardiothoracic surgical services that occurred from 1987 to 1992 w h e n the Medicare Fee Schedule was introduced. This 39% decrease was in constant dollars, not indexed to inflation. It occurred prior to the initiation of the Resource-Based Relative Value Scale, and was the work of a Republican administration. In 1993, with an additional 2.5% decrease in reimbursement, cardiac surgery reached its lowest level of p a y m e n t u n d e r Medicare. Beginning in 1994, we b e g a n to appreciate, on average, a slight t u r n a r o u n d , so that after a cumulative 39% decrease from 1987 to 1992, there has been an 11.2% overall increase in 1994 a n d 1995. Six percent of this increase occurred in 1995.

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REPORT MATLOFF JOINT COMMITTEE ON GOVERNMENT RELATIONS

Ann Thorac Surg 1995;60:740-3

The issues we believe we have positively affected over the last 12 to 18 m o n t h s are as follows: A new and different methodology for calculating the practice expense c o m p o n e n t of cardio-thoracic surgical Resource-Based Relative Value Scale codes Extrapolation versus "imputing'" A proactive Abt study Recommendations for thoracic transplants New pediatric surgical codes A revised value for coronary endarterectomy Update of the Surgical Conversion Factor: 10.9% The first, a new methodology .for recalculation of practice expenses, is the fourth initiative defined in OBRA 1989. Initially, it was for new CPT codes only, but in the near future it will be for all codes. I want to emphasize the fact that we are about to become proactive in our strategies on r e i m b u r s e m e n t by commissioning Abt to study our practice expense status. For those of you who are asked to participate, this is the most important thing you can do to help yourselves and our s p e c i a l ~ to withstand the potential adverse consequences of what is about to h a p p e n in the recalculation of practice expenses for the Health Care Finance Administration (HCFA). The methodology of imputing new CPT code practice expenses initially gave egregious results, especially in regard to thoracic organ transplants. By carefully working with HCFA, we have been able to evolve a methodology of extrapolation that allowed these values to be developed in relation to existing values for similar procedures and codes. Between HCFA, the STS, and the American Society, of Transplant Surgeons, revised reco m m e n d a t i o n s for most transplant Relative Value Units have b e e n adopted. The exception is for organ harvesting codes, where we have disagreed with the American Medical Association Relative Value Update Committee r e c o m m e n d a t i o n s and were, therefore, in the uncomfortable position of asking HCFA to overrule the Relative Value Update Committee. HCFA has responded, without explicitly repudiating the Relative Value Update Committee recommendations, by leaving these organ harvesting procedures for local p a y m e n t consideration. Members of our committee have also worked with HCFA on the definition of Pediatric Cardiac Surgical Code Values, including the Relative Work Values and Practice Expense component. These are the first pediatric codes to have been published in the Federal Register. Finally, the Surgical Conversion Factor was upgraded by 10.9% this year, a result of the fact that the total volume of surge D, done last year, the Volume Performance Standard, decreased. This fact only establishes the criticality of a separate Surgical Volume Performance Standard as espoused by the American College of Surgeons and a coalition of surgical specialties. As a cumulative result, the bottom line can be viewed in cash flow terms (Fig 1). The hemorrhage that occurred prior to 1994 has abated, and in 1994 and 1995, reimbursem e n t for a q u a d r u p l e bypass has incrementally increased

CABG x 4 1993 4 Veins

1994

$2532 --~$119---~$2651 ~ (4.6%)

$4 (o.2%) 1 Artery 3 Veins

~

$176 --~ $2827

(6.6%)

$21 (o.8%)

$2536 ---~$136--~$2672 ~ (5.4%)

1995

$44 (1.6%)i $199 ---~$2871

I

(7.4%)

i

Fig 1. Medicare reimbursement for 1993 to 1995. Bottom line cash flow. (CABG = coronary artery bypass grafting.)

by 11.65% if all veins are used, a n d by 13.2% if one conduit is an artery. Unfortunately, this respite will probably be short-lived. 1 believe that we can anticipate a further sequence of significant reductions because of two parallel occurrences: first, every congressional plan that was advanced for health care reform in 1994 embraced cuts in Medicare spending. W h e t h e r this will occur as a consequence of one or more of the following--the OBRA 1989-mandated five-year review of the Medicare Fee Schedule, to be done by the Relative Value Update Committee a n d potentially a very political process; the recalculation of practice expenses; increased copayments by Medicare beneficiaries; or by taxing benefits according to work or income s t a t u s - - d o e s not matter. The bottom line will be reduced payments to providers of Medicare services. As to the second factor, apart from Medicare, strong forces are at work in the market that, through private initiatives embracing managed care as a concept of medical practice, are significantly decreasing r e i m b u r s e m e n t for health care services. Whether the private sector adopts Medicare initiatives, as is happening, or whether Medicare moves to more programs of provider risk-sharing through m a n a g e d care options for elderly beneficiaries, an enormously strong, d o w n w a r d force is being exerted on health care pricing. Cost-shifting, which was primarily an outcome of caring for the u n i n s u r e d a n d of dealing with Medicare's a n d Medicaid's chronic u n d e r f u n d i n g of services, has now become the reality of life, with health m a i n t e n a n c e organizations and other configurations of m a n a g e d care also b e c o m i n g forces for cost-shifting, to cover their negotiated deep discounts. There is virtually nothing left to cover this cost-shifting, and unless I miss my guess, this will be one of the two forces that ultimately takes us to a National Health Care Plan. Of the three other areas in which we have b e e n involved, each is deserving of specific discussion. However, my further comments will be limited to the Office of Inspector General's investigation of the use of so-called experimental or investigational devices. Suffice to say, the potential damage or worst-case scenario for the b r o u h a h a s u r r o u n d i n g the use of investigational devices is that a significant n u m b e r of the involved institutions could be forced to bankruptcy, and we, as a country, could lose our worldwide leadership role in the develop-

Ann Thorac Surg 1995;60:740-3

m e n t of new medical technology if this process is allowed to play out to the Office of Inspector General's indicated end point. A P r o p o s a l for a S t r a t e g i c P l a n n i n g P r o c e s s The Joint G o v e r n m e n t Relations Committee has made a proposal to the Councils of the STS and the AATS concerning the initiation of a Strategic P l a n n i n g Process, which is designed to take us from what has been our traditional reactive mode to a proactive perspective of the future: The need to intensify our awareness a n d m a n a g e m e n t of issues affecting the specialty of cardiothoracic surgery Stage I

IGNORANT AND UNAWARE: easy if not blissful Stage I1 AWARENESS BUT UNINVOLVED: inactive by default or design Stage lit AWARENESS AND REACTIVE: some effect on outcomes Stage IV AWARENESS AND PROACTIVE: foresee and initiate action to improve our chances of affecting outcomes Stage V C O N T R O L : a n a l y z e e n v i r o n m e n t a l changes and our resources and shape the future This process is needed to i n t e n s i ~ our awareness and m a n a g e m e n t of the issues affecting our specialty. Conceptually, there are five evolutionary stages of which we n e e d to be cognizant. We begin in ignorance a n d bliss, with a sense that all action is reactive because we are working in the context of a world that we have not created. We want to more often move to the proactive end of the spectrum by selecting issues where we can make a difference and p l a n n i n g a constructive response to what is h a p p e n i n g in medicine's environment, hopefully in anticipation of the occurrence, that will have a positive outcome. We have done this occasionally in the last two years, on r e i m b u r s e m e n t issues, where our work has made a difference. The Abt Associates Study of Practice Expenses in cardiothoracic surgery that is forthcoming, with your help, could take us to a stage IV or V outcome, where we foresee the future, analyze e n v i r o n m e n t a l changes and our resources, and affect that outcome by

control of the future. The issues that we have identified for review are diverse, a n d represent the contentious e n v i r o n m e n t in which we find ourselves: An educational/training overview following Oakbrook Matching cardiothoracic surgical workforce issues to future needs

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Defining the role of cardiothoracic surgical services in a m a n a g e d care e n v i r o n m e n t Databases, informatics, and outcomes analyses, clinical and financial Development of protocols for use in the diagnosis and m a n a g e m e n t of cardiothoracic diseases The future of research, technology, a n d n e w product d e v e l o p m e n t in cardiothoracic surgery Methodologies for reducing health care costs without compromising quality Bioethical concerns We have already b e g u n work on the first four of these issues, through Oakbrook [2], through our Thoracic Surgery Workforce report [3], through our Atlanta meeting in September [4], a n d through the evolution of the STS database [5-7]. These four issues a n d the r e m a i n i n g ones listed need to be further defined and placed in the context of position statements with proposed action plans. Thinking ahead requires time, complete attention, and the participation of the multiple talents, aside from surgical skills, that exist in our specialty. The details of this strategic p l a n n i n g process will u n d o u b t e d l y be the subject of future reports to the memberships.

Summary and Conclusion If becoming involved in the process is ever going to make a difference, now is the time to do it! Please help us to help you by becoming involved, at the least as a resource. We hope that this overview will be of help to you in u n d e r s t a n d i n g where we have b e e n a n d where we believe we are going in cardiothoracic surgery.

Addendum The Abt Associates study of our practice expenses has been preempted by the awarding of the HCFA contract to do their universal study for all of medicine. We are in the process of selecting a new partner to complete our study of practice expenses.

References 1. Anders G. Money machines. Wall Street Journal, Dec 21, 1994. 2. Joint Conference on Graduate Education in Thoracic Surgery, Oak Brook, IL, Sep 25-27, 1992. 3. Cohn LH. The Fourth Report of the Thoracic Surgery Workforce of The American Association for Thoracic Surgery and The Society of Thoracic Surgeons. J Thorac Cardiovasc Surg (in press). 4. "Preparing Your Practice for Change: Thoracic Surgery Into the Next Decade," The Society of Thoracic Surgeons Managed Care Meeting, Atlanta, GA, Sep 24-25, 1994. 5. Anderson RP. First publications from The Society of Thoracic Surgeons national database. Ann Thorac Surg 1994;57:6-8. 6. Edwards FH, Clark RE, Schwartz M. Coronary artery bypass grafting: The Society of Thoracic Surgeons national database experience. Ann Thorac Surg 1994;57:12-20. 7. Clark RE. The Society of Thoracic Surgeons national database status report. Ann Thorac Surg 1994;57:20-7.