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 Government Affairs Newsletter, November 2011

Supercommittee Failure Leaves 27 Percent Medicare Payment Cut in Place - from AMA
With the Joint Select Committee on Deficit Reduction failing to reach agreement on a deficit-reduction proposal, physicians still face a 27 percent cut in Medicare physician payments scheduled to take effect Jan. 1. Congress has missed an opportunity to address the nation's fiscal problems, stabilize the Medicare program and permanently repeal the sustainable growth rate (SGR) formula. Read more
CMS Issues Final Rule for Accountable Care Organizations - from ACS
The Centers for Medicare & Medicaid Services (CMS) on October 20 issued its final rule for implementing a provision in the Affordable Care Act related to the creation of accountable care organizations (ACOs) under what is formally known as the Medicare Shared Savings Program. The purpose of the program is to encourage health care professionals and hospitals to form networks that deliver efficient, coordinated care and to allow ACOs to receive a portion of the savings that they produce. CMS made several changes to the ACO program in response to comments on the proposed rule issued earlier this year.  Some of the key changes can be summarized as follows:
  • The number of quality measurements that an ACO is required to track was reduced to 33 from 65
  • ACOs with net losses are no longer barred from continued participation in the program 
  • Meaningful use of electronic health records is no longer an ACO requirement
  • Initially, beneficiaries will be assigned to ACOs on a prospective, rather than a retrospective, basis, but final assignment will continue to be retrospective, as originally proposed
  • ACOs can share savings on the first dollar once the minimum savings rate is met, rather than after showing a 2 percent savings
  • ACOs still have the option of choosing between two tracks:  a one-sided model where the ACO only shares savings, or a two-sided model where the ACO shares savings and losses; however, the one-sided shared-savings-only model will now continue for the duration of all three years of the ACO’s agreement period.  Under the proposed rule, ACOs choosing the one-sided model would have been required to transition to the two-sided model and share losses during the agreement period
The American College of Surgeons submitted comments on the proposed rule for ACOs in June. Read a copy of the letter. In addition to the final rule, the government issued the following ACO-related materials:  (1) a joint CMS and Office of the Inspector General interim final rule related to waivers of the Civil Monetary Penalty laws, the Anti-Kickback statute, and the physician-self referral prohibition (the "Stark Law"); (2) an Internal Revenue Service fact sheet; and (3) a joint Federal Trade Commission and Department of Justice antitrust policy statement.
Appeals court rules in favor of PPACA individual mandate - from AAOS
The Washington Post reports that the U.S. Court of Appeals for the District of Columbia Circuit has upheld the so-called "individual mandate" portion of the Patient Protection and Affordable Care Act (PPACA), which requires most Americans to obtain health insurance by 2014 or face penalties. The plaintiff in the case had argued that Congress overstepped its authority by compelling individuals to enter into commerce by making them buy health insurance. The Obama administration countered that because nearly everyone will need health care and hospitals are barred from turning away emergency cases, people who go without insurance are making an economic decision about how their health care will eventually be funded, either by themselves or by passing the cost on to providers or taxpayers. The decision is notable because the author of the majority opinion, Judge Laurence Silberman, was appointed by President Ronald Reagan and is viewed as conservative-leaning. Read more
Politics; money stall liability reform efforts - from AAOS
An article in Politico looks at recent efforts to implement medical liability reform on the federal level. The author notes that, as far back as 2009, President Obama pledged to address the issue, allocating $25 million to test alternatives to the current medical liability system. However, since that time, budgetary cutbacks and partisan politics have slowed down medical liability reform efforts. Consequently, the $50 million called for under the Patient Protection and Affordable Care Act to expand upon the 2009 state demonstration projects remains unfunded by Congress, as is the $250 million requested by Obama to subsidize the U.S. Department of Justice’s exploration of alternative reform approaches. A bill currently being promoted by U.S. House Republicans calls for a $250,000 federal cap on noneconomic damages and a reduced statute of limitations. Read more
Summary of the Battle over the Maryland Patient Referral Law
By Mark A. Deitch, MD, Baltimore, MD
As of 2011, Maryland is the only state in the union to enact legislation that prohibits non-radiologists from owning MRI and CT facilities.  How this came about and what the medical community did in response is instructive to anyone interested in preventing the enactment of similar restrictive legislation.
In 1993, supported by radiology special interest groups, the Maryland General Assembly enacted the Maryland Patient Referral Law (Md. HEALTH OCCUPATIONS Code Ann. § 1-301 et seq.).  In some regards, this state law resembled the federal Stark regulations regarding self-referral, including the group practice exemption for direct supervision and in-office ancillary services.  The critical difference with the Maryland legislation, however, was the radiologic group succeeded in carving out CT and MRI from the in-office ancillary services provision.  The proposed statute prohibited non-radiologist physicians from holding an ownership stake in any CT or MRI facility in the state of Maryland.  This carve out was unique, as no other state had passed a similar statute.
In 1993, when the law was enacted, only a few Maryland physicians had ownership interests in high cost imaging.  The technology was new and the investment expenses to build, operate, and maintain the facilities were quite high.  By 2004, the practice environment had changed; many orthopaedic, cardiology and urology practices had acquired advanced imaging systems as ancillary services in their practices.  Most practitioners maintained at that time that the Maryland State Referral Law, like the federal statute, allowed for the ownership of advanced imaging under the “group practice” exemption.  Whether or not that argument was valid at the time was irrelevant, as the Maryland statute was rarely enforced.
In response to the increasing ownership of CT and MRI by non-radiologists, the radiology lobby pushed the legislature in 2004 to ask the Maryland State Attorney General to issue an opinion describing his interpretation of the 1993 Maryland State Referral Law.  The AG opined that the statute “bars a physician in an orthopedic group practice from referring patients for tests on an MRI machine or CT scanner owned by that practice, regardless of whether the services are performed by a radiologist employee or a member of the practice or by an independent radiology group.” The Attorney General stated that the same restrictions applied to other non-radiology specialists in the state.  The AG's opinion had a number of far-reaching effects concerning this previously ignored statute. 
First, a class action suit was filed (Duys v. Orthopaedic Associates) alleging that MRI scanning was provided to patients in violation of the Maryland Patient Referral Act.  In this case, the judge found in favor of the orthoapedic surgery practice, declaring that the language of the act allowed for non-radiologists to perform imaging in office under the "direct supervision" extension.
Second, a multispecialty coalition of orthopedists, urologists, cardiologists, emergency medicine physicians and gastroenterologists came together in 2004 and formed the Maryland Patient Care and Access Coalition (MPCAC).  The orthopaedic surgery efforts were led by the Maryland Orthopaedic Association (MOA), with substantial support from the AAOS PAC.  The MPCAC worked with legislators in both houses to sponsor legislation that would repeal the 1993 law.  The legislation was introduced in both the House and the Senate.
At the same time, and in response to the AG's 2004 opinion, the Maryland Board of Physicians (similar to the Board of Registration in other states), issued a declaratory ruling stating that to be in compliance with the Maryland Patient Referral Law, orthopaedic practices could not own MRI facilities.  Thirteen MPCAC member practices filed suit in Circuit Court to challenge the Board's position (Potomac Valley Orthopaedic Associates, v. Maryland State Board of Physicians), claiming that it was a misinterpretation of the law.  The Maryland Radiologic Society joined the Maryland Board of Physicians as a defendant in the case, and was supported by the American Radiologic Society.  The MPCAC plaintiffs were supported by a number of subspecialty societies, including the AAOS (through the AAOS PAC), American Association of Neurologic Surgeons, American Urological Association, and American College of Surgeons.  In essence Maryland had a very public turf war between the radiologists and the surgical specialists.
The Circuit Court found in favor of the Maryland Board of Physicians, in conflict with the ruling in the Duys case.  The MPCAC appealed the decision all the way to the Maryland Court of Appeals (the highest court in the state).  Oral arguments were heard in 2008 and the court promised a decision, although without a timeline.
During the more than two years it took for the Court of Appeals to issue its decision, MPCAC members worked feverishly to get the legislature to repeal or modify the original legislation.  They succeeded in getting bills introduced into both the House of Delegates (the lower house) and the Senate committees.  In both legislative houses, the committee chairs declared that they should wait for the court ruling before voting on the bills. 
In January 2011, the Maryland State Court of Appeals finally handed down their opinion, finding in favor of the Board of Physicians.  As such, the only remaining course of action was to push for repeal of the Maryland Patient Referral Law.  By most accounts, the MPCAC had garnered enough votes to send the bill out of committee and to the floor for votes in both houses.  Unfortunately the radiology lobby, working for the Maryland Radiologic Society and the American College of Radiology, succeeded in persuading the House and Senate committee chairmen to table the bills without a vote.
While American College of Radiology considers this Maryland legislation a model for the rest of the country, there are also important lessons to be learned for hand surgeons, Orthopaedic surgeons, and other non-radiologist physicians.  This case demonstrated that a well organized grassroots effort can be mounted by a coalition with common interests.  It is, without a doubt, easier to prevent the passage of undesirable legislation than it is to repeal them.  Coalition efforts have been successful in preventing legislation similar to the Maryland Patient Referral Law from being passed in Pennsylvania, Oregon, Wisconsin and Illinois.
What we have learned in Maryland is that physicians need to remain vigilant and proactive.  There are and continue to be a number of forces both outside and inside medicine that affect our ability to practice.  Physicians need to work together to achieve common goals.  Unfortunately this takes money and time, but we were lucky to have the support of local group practices and national organizations.  In Maryland MPCAC has remained active and continues to monitor legislative activity at a local level.  Following the Court's ruling, the MPCAC continued to testify on state and federal panels in favor of repeal, and working towards the introduction of new bills that would revise the Maryland Patient Referral Law to remove the sections prohibiting ownership of advanced imaging facilities.  Expert assistance is needed from individuals familiar with state and national health care law. 
And finally, it is critical for hand surgeons and other interest groups to be aware of what is going on in their state and be involved, both with their state professional societies and in supporting local and national political action committees.  Only by taking these actions can we preserve the autonomy of our medical practices and provide optimal patient care.
Editor’s note: There is a national trend to change the way medicine is practiced.  Radiologists and hospitals do not want other physicians owning imaging machines.  Physical Therapists want direct access to patients and do not want their members employed by physicians.  Nurses are graduating with Ph.D.’s and want to be addressed as Doctor.  These changes may or may not improve the way health care is delivered in this country, but it is important that practicing clinicians be aware of these changes and become involved in the debate.  A very good place to start is with your state organization.  If you do not know who to contact the ASSH Government Affairs Committee will provide you that information.