AMERICAN SOCIETY OF CATARACT AND REFRACTIVE SURGERY

OUTPATIENT OPHTHALMIC SURGERY SOCIETY

October 10, 2006

Mark McClellan, MD, PhD

Administrator

Centers for Medicare and Medicaid Services

Department of Health and Human Services

Hubert H. Humphrey Building

ATTN: CMS-1321-P

200 Independence Avenue

Room 445-G

Washington, DC 20201

Re: Medicare Programs; Revision to Payment Policies to the Physician Fee

Schedule for Calendar Year 2007; Proposed Rule

Dear Dr. McClellan:

The American Society of Cataract and Refractive Surgery (ASCRS) is a medical specialty society representing more than 9,500 ophthalmologists in the United States and abroad who share a particular interest in cataract and refractive surgical care. ASCRS members perform the vast majority of cataract procedures done annually in the United States.

The Outpatient Ophthalmic Surgery Society (OOSS) is a professional medical association of more than 1000 ophthalmologists, nurses, and administrators who specialize in providing high quality ophthalmic surgical procedures performed in cost-effective outpatient environments, including ambulatory surgical centers (ASCs).

ASCRS and OOSS appreciate the opportunity to submit comments on the proposed rule for the 2007 Medicare physician fee schedule.

Sustainable Growth Rate (SGR)

As you know, physicians are faced with a 5.1% reduction in their Medicare payments beginning in 2007 as a result of the flawed SGR formula. The flawed formula is also slated to produce steep negative updates for the next several years. The Centers for Medicare and Medicaid Services (CMS) agrees with the medical community that the SGR formula is unsustainable, yet it takes no action to appropriately address problem areas over which it has control. We have commented over the past several years about our concerns with the flawed SGR formula and offered realistic solutions for addressing some areas over which the agency has control. To recap, we describe these areas in following paragraphs.

Removal of Physician-Administered Medicare-Covered Drugs Retroactively

We, once again, urge CMS to use its administrative authority to remove drugs from the physician payment pool retroactive to 1996, filling the gap between actual spending and target spending, thereby making it more likely Congress will permanently repeal the SGR.

As we have stated previously, physicians do not have control over the cost of drugs and

biologics. Furthermore, Part B drugs are not procedures, diagnostic tests, or services; Part B drugs are only used in conjunction with certain procedures, diagnostic tests, and/or services.

For the past several years, ASCRS and OOSS, as well as numerous other medical and specialty societies, members of the Medicare Payment Advisory Commission (MedPAC) and the Practicing Physicians Advisory Committee (PPAC), the Government Accountability Office (GAO), congressional committees with jurisdiction over the Medicare program, and the majority of Congress, have identified the cost of physician-administered drugs as a primary factor that drives physician spending above the expenditure target. Collectively and independently, these groups have consistently recommended CMS use its administrative authority to remove drugs from the definition of physician services back to the base year, 1996.

Why does the agency continue to believe it does not have the authority to make the necessary adjustments that would drastically reduce the cost of replacing the flawed SGR formula with a stable payment system? There is overwhelming support in favor of making this necessary change, and the agency has the authority to assist Congress in fulfilling its goal of replacing the flawed SGR formula.

Again, there is overwhelming support for CMS to take such action; it is time for the agency to finally act. Therefore, we urge CMS to use its authority to remove drugs from the physician payment pool retroactive to 1996, filling the gap between actual spending and target spending, thereby making it more likely Congress will permanently repeal the SGR.

Accurately Accounting for Changes in Law and Regulation

ASCRS and OOSS again urge CMS to accurately account for changes in law and regulation when calculating the physician payment update. Specifically, we urge the agency to ensure that national and local coverage decisions and screening benefits (including the services they generate) that have been added to the Medicare program be included in the expenditure target.

We continue to believe that new coverage decisions—national and local—have an impact on utilization. Most notable are coverage decisions that require certain diagnostic tests be performed in conjunction with the procedure(s) being addressed by the coverage decision. We understand that only coverage decisions added to the program by legislation—not by regulation—have been accounted for in the expenditure target. However, we continue to believe that CMS should include all coverage decisions—whether added to the program by statute or by the agency—when calculating the expenditure target.

In our previous comments, we used as an example the national coverage determination (NCD) on ocular photodynamic therapy (OPT) with verteporfin (Visudyne) for age-related macular degeneration (ARMD). This NCD, which was implemented in April 2004, expanded coverage for this type of therapy to beneficiaries with certain diagnoses; however, the coverage decision states that the newly expanded coverage is only allowed “provided certain criteria are met.” As a result of the coverage policy created, physicians are required to perform certain diagnostic tests to perform OPT with verteporfin.

Therefore, CMS is directly responsible for volume increases related to certain services and procedures and must adjust the SGR target accordingly.

Pay for Performance and Health Information Technology

From the physician’s perspective, it seems as though CMS has chosen to ignore the aforementioned concerns and instead highlight its commitment to moving the Medicare program toward becoming a value-based purchaser of health care services, alluding to the fact that linking quality to payment is a way to solve the SGR conundrum. Because CMS continues to view pay for performance as a panacea to the SGR problem, we would like to remind the agency that under the current flawed SGR payment system, pay for performance will not be successful and has the strong potential to increase the volume and intensity of physician services.

At the September 6-7, 2006, MedPAC meeting, Chairman Glenn Hackbarth made the following comments as they relate to the incompatibility of the current SGR formula and pay for performance:

The statutory and regulatory changes are, in theory, adjusted for in the target. But there are other changes in health care delivery that would not be captured by those that are desirable…For example, pay-for-performance. There are a lot of areas where there is known under service and quality care requires an increase in the provision of certain sort of services. The [SGR] formula doesn’t adjust for those.

If CMS wishes to see a true pay for performance system succeed, it must do everything within its statutory authority to enable Congress to repeal the SGR and replace it with a payment system that accurately reflects the cost of providing high-quality care to Medicare beneficiaries, such as the Medicare Economic Index (MEI). Furthermore, under the current flawed payment system, it would be difficult for physicians to adopt and maintain health information technology (HIT) systems. In the proposed notice, CMS supports the adoption of HIT as the agency believes the use of HIT may contribute to improved processes and outcomes of care, including shortened illnesses and the avoidance of adverse drug reactions. Clearly, CMS views HIT as a key component in a successful pay for performance program. However, for the pay for performance program to be successful, CMS must provide incentives to physicians, and under the SGR this is not possible. It is unreasonable for the agency to expect physicians to invest in HIT and participate in pay for performance programs at a time when they are, yet again and in the future, facing steep reductions as a result of the current flawed SGR payment system.

Again, we urge the agency to take immediate action on the following recommendations:

• Use its authority to remove drugs from the physician payment pool retroactive to

1996, filling the gap between actual spending and target spending, thereby making it more likely Congress will permanently repeal the SGR.

• Accurately account for changes in law and regulation when calculating the physician payment update. Specifically, we urge the agency to ensure that national and local coverage decisions and screening benefits (including the services they generate) that have been added to the Medicare program be included in the expenditure target.

Budget Neutrality

ASCRS and OOSS urge CMS to reconsider its previous proposal to make budget neutrality adjustments to the work RVUs and encourage the agency to apply the budget neutrality adjustments to the 2007 conversion factor.

Recently, we submitted comments on the five-year review of work relative value units (RVUs) proposed rule. In the rule, CMS proposed to meet its budget-neutrality requirement by reducing all work RVUs by an estimated 10 percent. In our comments on the proposed rule, we strongly urged CMS to apply the budget neutrality adjuster to the physician fee schedule conversion factor, rather than the work RVUs.

We, once again, ask CMS to apply the budget-neutrality adjustments to the 2007 conversion factor, rather than make budget-neutrality adjustments to the work RVUs.

Changes to the Medicare Economic Index (MEI)

We are very concerned with the additional 0.5 percent reduction of the 2007 physician fee schedule update from -4.6 percent to -5.1 percent. The increase in the cut was caused by a downward revision of the Medicare Economic Index (MEI) which is a measure of annual increases in the cost of operating a private medical practice that is used in the annual update of the physician fee schedule. This reduction was not proposed or even discussed in the proposed rule. Based on the impact table in the proposed rule that shows $75 billion of allowed charges under the physician fee schedule, a -0.5 percent reduction in the update will result in a $375 million cut in physician payments in 2007.

Furthermore, the reduced MEI was based on the use of a new measure of productivity by the Bureau of Labor Statistics (BLS) and lower projections of inflation. Few details were provided and comments on the changes were not requested. Had we been given the opportunity to comment, we would have questioned the use of data that shows increased productivity in a year when the productivity of most physician practices has been reduced significantly by the need to counsel Medicare beneficiaries about the new prescription drug benefit and the availability of preventive services and to comply with the agency’s requests related to the Physician Voluntary Reporting Program (PVRP). Therefore, we urge CMS to delay any changes in the MEI pending publication of the proposed changes and solicitation of public comments in the Federal Register.

ASCRS and OOSS look forward to working with CMS on the 2007 physician fee schedule and encourage CMS to include the recommendations outlined above in the final rule. Should you have any questions or comments, please contact:

Emily L. Graham, RHIT, CCS-P, CPC

ASCRS Manager of Regulatory Affairs

703-591-2220

egraham@ascrs.org

or

Michael A. Romansky

OOSS Legal Counsel

MRomansky@OOSS.org.

Sincerely,

Samuel Masket, MD

President, ASCRS

William Fishkind, MD

President, OOSS