MMA News
Budget Includes Reimbursement Cuts, Provider Tax Repeal
After a government shutdown that lasted more than two weeks, lawmakers and Gov. Mark Dayton finally agreed to a budget solution in late July that included mixed news for Minnesota physicians.
Controversial Items Left Out of the Budget
- Changes to the state’s newborn screening program or limitations on collection of that data
- Limits on the use of vaccines that include “fetal DNA”
- A proposal to reduce reimbursements to “high-cost providers”
- A proposal to create pregnancy health care homes and mental health care homes
- Limits on stem-cell research or abortion-related services
Budget Pros
- Approximately $500 million more for health and human services programs than was approved by the House and Senate in May
- Continues the early enrollment of adults without children in Medical Assistance, allowing the continued elimination of the General Assistance Medical Care program and the ability to capture federal funds
- Does not completely cut off anyone from Medical Assistance or MinnesotaCare
- Allows the state to receive federal money from the Affordable Care Act
- Begins phasing out the 2 percent provider tax and repeals it altogether in 2019
- Provides $15 million to the State Health Improvement Program for fiscal year 2012
Budget Cons
- Cuts general fund spending in health and human services areas by nearly $1 billion
- Cuts physician and other outpatient provider reimbursements for state health insurance programs by 3 percent across the board
- Reduces payments to state health plans by 10 to 13 percent (those cuts will likely be passed on to physicians and other providers)
- Implements a voucher program for MinnesotaCare that may not allow enrollees to afford adequate coverage for outpatient services
- Cuts the Medical Education and Research Cost program by 50 percent in 2012 and 25 percent in 2013
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On the positive side, the final Health and Human Services (HHS) budget bill included a provision repealing the 2 percent provider tax by 2019. A gradual phase-out would begin in 2014, the year the federal government will start providing subsidies for low-income individuals such as those enrolled in MinnesotaCare to purchase health insurance in the private market. Currently, MinnesotaCare is partially funded by the provider tax.
The MMA has long pushed for elimination of the tax. “Minnesota physicians have fought hard for the repeal of the provider tax, and we are relieved that lawmakers are finally acknowledging that a selective tax on the sick is the wrong way to fund health care programs,” says MMA President Patricia Lindholm, M.D.
The budget deal would also keep in place the early expansion of Medicaid that the governor approved in March, allowing adults without children to receive Medical Assistance, the state’s version of Medicaid. It does not include significant eligibility or benefit cuts.
However, the budget does cut Medical Assistance and MinnesotaCare fee-for-service payment rates for physicians and other providers of outpatient services by 3 percent. It also cuts payments to health plans that administer Medical Assistance and MinnesotaCare benefits on behalf of the state by 10 to 13 percent to reflect savings from efforts to decrease hospital admissions and contract negotiations with providers.
“We expected cuts, and it appears lawmakers attempted to minimize them,” Lindholm says. “But the bottom line is that Medical Assistance is already underfunded and additional cuts will cause financial hardships for some clinics and result in either reduced access or cost shifting.”
Budget Details
Overall, the new budget authorizes $35.4 billion in spending over the next two years including $12.4 billion for health and human services, an 11.6 percent increase over what was spent in the previous biennium. However, that figure is below the amount projected for costs during that period.
The HHS budget includes $11.3 billion in general fund money, which is nearly $500 million more than the Legislature proposed and $180 million less than the governor asked for.
It also includes a proposal to privatize MinnesotaCare for about 8,000 adults without children who earn between 200 and 250 percent of federal poverty guidelines. Enrollees would receive a subsidy to purchase private health insurance. The MMA is not opposed to such an approach, but is concerned that the money the state would provide may not be enough to allow those Minnesotans to afford adequate coverage.
MMA Argued for Tobacco Tax Increase
During the government shutdown, the MMA urged lawmakers to increase the fee on tobacco products in order to raise revenue to prevent cuts to state health care programs, help close the state’s budget gap, and reduce smoking rates in Minnesota.
The MMA sent a letter to Gov. Mark Dayton and legislative leaders July 1 urging them to come to a budget agreement that included a $1.50 per pack tax increase on cigarettes. “Not only would this increase raise nearly $400 million in revenue for the biennium, it would directly lead to lower health care costs by reducing the number of new smokers,” MMA President Patricia Lindholm, M.D., said in the letter. “A tobacco tax increase is not only smart tax policy, but it is smart health policy.”
The governor had previously said he preferred not to increase the tobacco fee, since it is a regressive form of raising revenue. However, on July 6, during final budget negotiations, Dayton offered a $1 per pack fee increase to GOP leaders hoping they would find it more palatable than an income tax increase. Increasing the tobacco fee is supported by nearly three in five Minnesotans, according to a poll released in June by the Raise It For Health Coalition. The MMA also sent an Action Alert to members asking them to urge their lawmakers to support the fee increase. GOP lawmakers rejected Dayton’s offer to increase the fee as part of a budget solution the same day he proposed it.
MDH Warns of Additives in Temporary Tattoos
The Minnesota Department of Health issued a warning in June about use of henna products that contain additives to create “temporary tattoos.”
Materials that are sometimes added to henna can cause allergic reactions when applied to the skin and can cause some people to develop lasting chemical sensitivities, according to health officials. One of the most commonly used additives—and one that is of particular concern—is a darkening agent called para-phenylenediamine.
The Department of Health issued the warning after reports of allergic skin reactions in a group of 35 Twin Cities eighth-graders who had been given temporary tattoos using a dark-colored material. About half of the children had skin reactions, which included blistering and weeping lesions. In most cases, the lesions appeared within 20 days of getting the tattoo, and half occurred within seven days.
Medicare Physician Fee Schedule Includes 30 Percent Cut
The Centers for Medicare and Medicaid Services (CMS) has issued its proposed changes to the 2012 Medicare Physician Fee Schedule, including a plan to cut Medicare payments to physicians by 30 percent. The agency is required to issue the fee schedule based on current payment rules. With the Sustainable Growth Rate (SGR) formula now in effect, physicians will see a nearly 30 percent decrease in reimbursement for services beginning in 2012.
CMS administrator Donald Berwick, M.D., expressed concern about the cut in physician payments in a statement: “We need a permanent SGR fix to solve this problem once and for all,” he said. “That’s why the president’s budget and his fiscal framework call for averting these cuts, and we are determined to pass and implement a permanent and sustainable fix.”
Although similar cuts have been averted almost every year by last-minute Congressional action, CMS cannot assume such a reprieve will occur and must issue its proposed fee schedule as if the payment cut were going to go into effect.
The proposed rule, issued July 1, also includes a significant expansion of the agency’s misvalued code initiative, which CMS describes as an effort to ensure that Medicare is paying accurately for physician services.
It also includes adjustments for costs based on geographic area. In order to improve geographic variation adjustments under Medicare, the agency is replacing some of its data sources and making other changes based on public comments from prior years. The Patient Protection and Affordable Care Act required CMS and the Institute of Medicine (IOM) to study geographic variation, and the IOM issued its first of three reports on the subject on June 1.
The proposed rule also would begin to establish a new “value-based modifier” to reward doctors for providing higher quality, more efficient care. The modifier would debut in 2015 and be used only for certain physicians and physician groups, but it would be extended to all physicians by 2017. This year’s rule includes proposed quality and cost measures that would be included in the modifier.
The MMA supported the creation of a value-based modifier as part of national health care reform. The assumption is that such a modifier will benefit Minnesota physicians, as they provide high-quality, low-cost care compared with national averages.
CMS will accept comments on the proposed rule until August 30 and will issue a final rule by November 1.
MMA in Action
Some of the recent ways MMA staff and members have worked for physicians in Minnesota.
- Dave Renner, MMA director of state and federal legislation, went on a northern Minnesota road tour. On July 12, he participated in a District Dialogue with Rep. Carolyn McElfatrick (R-Deer River) hosted by the Grand Itasca Clinic and Hospital in Grand Rapids. A dozen physicians and hospital staff discussed the implications of health care reform as well as the new leadership at the Capitol. A freshman legislator, McElfatrick serves on the House Health and Human Services Finance Committee and the Health and Human Services Reform Committee. Nathan Noznesky, M.D., an MMA member and a surgeon at Grand Itasca Clinic and Hospital, attended the meeting and questioned McElfatrick about health care cuts and whether lawmakers intended to support Minnesota’s medical infrastructure. Later that evening, Renner presented a legislative update to members of the Range Medical Society at the Timberlake Lodge in Grand Rapids. The next day, he met with physicians and staff at Sanford Health Bemidji and gave a similar update.
- The MMA Foundation (MMAF) awarded scholarships to Crystal Bockoven from Milaca and Hannah Wangberg from Bemidji, both of whom will start medical school at the University of Minnesota Duluth in September. Eight other medical students are currently receiving MMAF scholarships. The scholarships are funded through physician and donor contributions. Learn more and donate at mmafoundation.org.
- Eric Dick, MMA manager of state legislative affairs, joined the Twin Cities Medical Society’s Senior Physicians Association for its monthly meeting on July 12. Dick provided the group of nearly 40 retired physicians with an update on the 2011 legislative session and discussed the government shutdown and its effect on physicians, hospitals, and the state’s health care system.
Complete Your Census
Each year, the MMA conducts a census of Minnesota physicians and their clinics. All physicians should have received a request for updated information by email or U.S. mail.
The MMA uses the information to describe the state of medicine to policymakers and to maintain the MMA’s online Physician Finder—a directory of physicians in the state that gets about 1 million hits a year.
To ensure your information is accurate, please update it using either the paper or online form. MMA members can complete the form online at mnmed.org/census. Nonmembers, go to mnmed.org/censusnonmembers.
MMA Calls for Independent Payment Advisory Board Repeal
The MMA has joined other medical groups in calling for the repeal of a provision in the federal Patient Protection and Affordable Care Act that creates an Independent Payment Advisory Board (IPAB).
The 15-member commission would be tasked with cutting costs when Medicare’s per capita growth rate exceeds a specified target. A U.S. House budget committee held hearings in July about the proposed board.
The MMA, the AMA, and other medical associations oppose the creation of the IPAB because it would be prohibited from cutting hospital payments until 2020 and from instituting other cost-cutting options such as rationing health care, raising premiums, or shifting costs to beneficiaries. This framework would put physicians and pharmaceutical companies at risk for bearing a disproportionate burden of any IPAB-initiated cuts.
When the proposal for the advisory board first surfaced, some physicians in Minnesota were open to the concept, says Dave Renner, MMA director of state and federal legislation. “Some of our physician members thought maybe there’s some merit to this idea of depoliticizing decisions that are made on how we fund Medicare,” Renner says. But that changed when doctors learned they did not get the same protections as hospitals or other organizations. That was particularly alarming for physicians, Renner says, because they already face annual payment cuts generated by the sustainable growth rate formula. A 30 percent cut is scheduled for 2012.
For now, the future of the IPAB appears to be in limbo. The Obama administration has yet to appoint members, who would ultimately need to be confirmed by the Senate.
Legislation that would repeal the IPAB provision was introduced in both the House and Senate earlier this year.