As Dr. Goldschmid wrote in his column, the Department of Managed Health Care (DMHC) has proposed new regulations that put California’s emergency care system at risk by inhibiting physicians’ ability to bill for services rendered. The proposed regulations were filed in response to an executive order issued by Governor Schwarzenegger, which directed the DMHC to stop physicians from billing patients for emergency care. The regulations are open for public comment. I don’t need to tell you this is a huge issue that called for an immediate response from the CMA, SMCMA, and others to respond to the proposed regulation. The proposed regulation does not work for consumers, but rather favors the profitable insurance industry and hurts individual physicians. CMA responded to this threat, as did SMCMA. In our case we wrote to each of our state legislators explaining that this regulation threatens California’s emergency and trauma care system by putting more burdens on individual physicians and hospitals. We also sent out press releases to the media explaining how this regulation negatively impacts medicine, which resulted in media calls to President Goldschmid. The CMA has responded in numerous ways and currently is working to gather together a large contingent of doctors to attend the public hearings the DMHC has scheduled regarding the balance billing ban.

On another front, Medicare announced that physicians will not be paid for any claims during the last nine days of the federal fiscal year (September 22-30, 2006). This payment hold will defer $1.3 billion in FY 2006 claims to the FY 2007 budget. No interest or late-payment penalty will be paid to physicians whose payments are delayed by this one-time hold.

Then we received notice that PacAdvantage, the nonprofit health insurance purchasing alliance for small businesses with two to 50 employees, will cease operations at year-end. Over the years insurance providers have withdrawn from the voluntary program, with only three plans continuing to participate. Then Blue Shield of California announced its departure on December 31. Blue Shield was the eighth insurer to quit since the program was created in 1992. Now small employers are faced with locating new coverage for their employees. Please note that if your office has participated in the PacAdvantage program, you have only through the end of the year to find a new insurer. There is no other major small business pool for small employers that will fill the gap. I suggest that you call Marsh Affinity Group, our insurance broker, to learn what other insurance options are available to you. The Marsh telephone number is 1-800-842-3761, or on the Web at www.cmacounty.insurance@march.com.

We are again faced with another Medicare payment cut for 2007. I call upon you to contact our congressional representatives to motivate them to fix the Medicare payment problems. If Congress fails to act before the end of the year, physician rates will be cut 5 percent on January 1, and under the Sustainable Growth Rate (SGR) the cuts are to continue annually for a total of 35 percent during the next six years. The cuts are an unintended consequence of a formula, established under laws passed in 1989 and 1997, that was supposed to establish a formula for spending on doctors’ services. The formula, SGR, allows Medicare spending on physician services to grow at the rate of the gross domestic product (GDP), but it actually penalizes physicians because the cost of physician services rises more rapidly than the GDP. Reimbursement for all other Medicare providers is calculated using the Medicare Economic Index (MEI), which is a market index of actual medical practice costs. Health plans, hospitals, and nursing homes are all seeing payment increases, while physician payments are being slashed. As in 2006, members of Congress have suggested that perhaps they may be able to freeze payments at 2005 levels. However, our Congresspersons must understand that a payment freeze is not acceptable and that the SGR formula must be replaced with a new formula based on the MEI, which would increase physician payments by 2.8 percent in 2007. The Medicare payment formula must be reformed to avoid further access-to-care issues.

In the proposed Medicare payment rules for 2007, CMA does adopt the AMA/specialty society RVS Update Committee (RUC) recommendations. These affect more than 2,000 CPT codes, and shift payment incentives toward E&M and primary care. There are also rate changes for some specialties as a result of the RVU practice expense changes.

The above just highlights some of the issues that evolved over August. Next year I’ll stay home.