Alicia Ault

Participants in several hospital and physician-related quality organizations are sanguine that almost $16 million in grants from the Robert Wood Johnson Foundation will hasten development of national cost and quality measures, as well as acceptance of those measures.

Last fall, the foundation awarded $8.7 million to the Engelberg Center for Health Care Reform at the Washington-based Brookings Institution, $4.2 million to the America's Health Insurance Plans (AHIP) Foundation, and another $3 million to various other groups to identify potential cost measures.

The project will be coordinated by Dr. Mark McClellan, the former commissioner of the Food and Drug Administration and former administrator of the Centers for Medicare and Medicaid Services, who now directs the Engelberg Center.

The grants will help “fill in the gaps” of the work being done by the Quality Alliance Steering Committee (QASC), said Susan Pisano, a spokeswoman for the AHIP Foundation. The Steering Committee is an amalgam of the Hospital Quality Alliance and the AQA, bringing together hospital and physician concerns.

“By bringing all stakeholders in the health care system together, this new project is an important step in accelerating the current slow pace of improvement in health care quality,” said Dr. Carolyn Clancy, director of the Agency for Health Care Research and Quality, and cochair of the QASC, in a statement.

The RWJ Foundation's backing also serves as recognition that the Steering Committee's efforts are worthwhile, said Dr. Frank Opelka, vice chancellor of clinical affairs at the Louisiana State University Health Sciences Center, and the American College of Surgeons' representative on the QASC.

Established in 2006, the Steering Committee's principal members include: the RWJ Foundation, the American Medical Association, the American College of Physicians, the Association of American Medical Colleges, the Federation of American Hospitals, Blue Cross/Blue Shield, the American Hospital Association, the Society of Thoracic Surgeons, AHIP, the AFL-CIO, the National Partnership for Women and Families, the National Business Coalition on Health, the Pacific Business Group on Health, General Motors, Honeywell, Boeing, Exxon Mobil, the Joint Commission, the AHRQ, the Centers for Medicare and Medicaid Services, the National Quality Forum (NQF), and the National Committee for Quality Assurance.

The group will use performance measures that have been developed and endorsed by the NQF and AQA, but will use them in conjunction with a new database being developed by AHIP. The data will be collected from private plans and Medicare—all from claims—and aggregated into a practice-wide and a nationwide picture, said Ms. Pisano. The database means that reports back to physicians will “provide a more comprehensive view of their practices,” she said. Instead of getting a report from one plan on all that plan's patients, and another from another plan, it will be a report that cuts across all insurers.

The bigger picture is important because it will give physicians the information they need to evaluate their performance across an entire practice, not just a single encounter, said Dr. John Tooker, executive vice president and CEO of the American College of Physicians.

It also will make for more accurate reporting, he said, noting that with a larger sample, there should be fewer outlier patients to skew a physician's rating.

The RWJ Foundation grants will also support the development of cost measures that will look at how physicians and hospitals use resources and compare them with national data. Initially, measures will be developed for 20 common conditions.

Both the quality and cost data will also eventually be shared with consumers.

“Tracking performance by adherence to quality standards tells patients only part of what they need to know in order to make informed decisions about health care services,” said Dr. McClellan, in a statement. “They also need to know how the cost for these services compares.”

Participants in several hospital and physician-related quality organizations are sanguine that almost $16 million in grants from the Robert Wood Johnson Foundation will hasten development of national cost and quality measures, as well as acceptance of those measures.

Last fall, the foundation awarded $8.7 million to the Engelberg Center for Health Care Reform at the Washington-based Brookings Institution, $4.2 million to the America's Health Insurance Plans (AHIP) Foundation, and another $3 million to various other groups to identify potential cost measures.

The project will be coordinated by Dr. Mark McClellan, the former commissioner of the Food and Drug Administration and former administrator of the Centers for Medicare and Medicaid Services, who now directs the Engelberg Center.

The grants will help “fill in the gaps” of the work being done by the Quality Alliance Steering Committee (QASC), said Susan Pisano, a spokeswoman for the AHIP Foundation. The Steering Committee is an amalgam of the Hospital Quality Alliance and the AQA, bringing together hospital and physician concerns.

“By bringing all stakeholders in the health care system together, this new project is an important step in accelerating the current slow pace of improvement in health care quality,” said Dr. Carolyn Clancy, director of the Agency for Health Care Research and Quality, and cochair of the QASC, in a statement.

The RWJ Foundation's backing also serves as recognition that the Steering Committee's efforts are worthwhile, said Dr. Frank Opelka, vice chancellor of clinical affairs at the Louisiana State University Health Sciences Center, and the American College of Surgeons' representative on the QASC.

Established in 2006, the Steering Committee's principal members include: the RWJ Foundation, the American Medical Association, the American College of Physicians, the Association of American Medical Colleges, the Federation of American Hospitals, Blue Cross/Blue Shield, the American Hospital Association, the Society of Thoracic Surgeons, AHIP, the AFL-CIO, the National Partnership for Women and Families, the National Business Coalition on Health, the Pacific Business Group on Health, General Motors, Honeywell, Boeing, Exxon Mobil, the Joint Commission, the AHRQ, the Centers for Medicare and Medicaid Services, the National Quality Forum (NQF), and the National Committee for Quality Assurance.

The group will use performance measures that have been developed and endorsed by the NQF and AQA, but will use them in conjunction with a new database being developed by AHIP. The data will be collected from private plans and Medicare—all from claims—and aggregated into a practice-wide and a nationwide picture, said Ms. Pisano. The database means that reports back to physicians will “provide a more comprehensive view of their practices,” she said. Instead of getting a report from one plan on all that plan's patients, and another from another plan, it will be a report that cuts across all insurers.

The bigger picture is important because it will give physicians the information they need to evaluate their performance across an entire practice, not just a single encounter, said Dr. John Tooker, executive vice president and CEO of the American College of Physicians.

It also will make for more accurate reporting, he said, noting that with a larger sample, there should be fewer outlier patients to skew a physician's rating.

The RWJ Foundation grants will also support the development of cost measures that will look at how physicians and hospitals use resources and compare them with national data. Initially, measures will be developed for 20 common conditions.

Both the quality and cost data will also eventually be shared with consumers.

“Tracking performance by adherence to quality standards tells patients only part of what they need to know in order to make informed decisions about health care services,” said Dr. McClellan, in a statement. “They also need to know how the cost for these services compares.”

Participants in several hospital and physician-related quality organizations are sanguine that almost $16 million in grants from the Robert Wood Johnson Foundation will hasten development of national cost and quality measures, as well as acceptance of those measures.

Last fall, the foundation awarded $8.7 million to the Engelberg Center for Health Care Reform at the Washington-based Brookings Institution, $4.2 million to the America's Health Insurance Plans (AHIP) Foundation, and another $3 million to various other groups to identify potential cost measures.

The project will be coordinated by Dr. Mark McClellan, the former commissioner of the Food and Drug Administration and former administrator of the Centers for Medicare and Medicaid Services, who now directs the Engelberg Center.

The grants will help “fill in the gaps” of the work being done by the Quality Alliance Steering Committee (QASC), said Susan Pisano, a spokeswoman for the AHIP Foundation. The Steering Committee is an amalgam of the Hospital Quality Alliance and the AQA, bringing together hospital and physician concerns.

“By bringing all stakeholders in the health care system together, this new project is an important step in accelerating the current slow pace of improvement in health care quality,” said Dr. Carolyn Clancy, director of the Agency for Health Care Research and Quality, and cochair of the QASC, in a statement.

The RWJ Foundation's backing also serves as recognition that the Steering Committee's efforts are worthwhile, said Dr. Frank Opelka, vice chancellor of clinical affairs at the Louisiana State University Health Sciences Center, and the American College of Surgeons' representative on the QASC.

Established in 2006, the Steering Committee's principal members include: the RWJ Foundation, the American Medical Association, the American College of Physicians, the Association of American Medical Colleges, the Federation of American Hospitals, Blue Cross/Blue Shield, the American Hospital Association, the Society of Thoracic Surgeons, AHIP, the AFL-CIO, the National Partnership for Women and Families, the National Business Coalition on Health, the Pacific Business Group on Health, General Motors, Honeywell, Boeing, Exxon Mobil, the Joint Commission, the AHRQ, the Centers for Medicare and Medicaid Services, the National Quality Forum (NQF), and the National Committee for Quality Assurance.

The group will use performance measures that have been developed and endorsed by the NQF and AQA, but will use them in conjunction with a new database being developed by AHIP. The data will be collected from private plans and Medicare—all from claims—and aggregated into a practice-wide and a nationwide picture, said Ms. Pisano. The database means that reports back to physicians will “provide a more comprehensive view of their practices,” she said. Instead of getting a report from one plan on all that plan's patients, and another from another plan, it will be a report that cuts across all insurers.

The bigger picture is important because it will give physicians the information they need to evaluate their performance across an entire practice, not just a single encounter, said Dr. John Tooker, executive vice president and CEO of the American College of Physicians.

It also will make for more accurate reporting, he said, noting that with a larger sample, there should be fewer outlier patients to skew a physician's rating.

The RWJ Foundation grants will also support the development of cost measures that will look at how physicians and hospitals use resources and compare them with national data. Initially, measures will be developed for 20 common conditions.

Both the quality and cost data will also eventually be shared with consumers.

“Tracking performance by adherence to quality standards tells patients only part of what they need to know in order to make informed decisions about health care services,” said Dr. McClellan, in a statement. “They also need to know how the cost for these services compares.”

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase Medicare physician fees by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress next month but was discussed and voted on at a panel meeting in January.

The panel believes that physician fees should not be cut, said MedPAC chairman Glenn M. Hackbarth. “That's a very important message for us to convey to Congress.” Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers. “We try to zero in on the most appropriate update,” he said, adding that cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey. In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion. The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use. The reporting should be confidential for 2 years. After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla., and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% “doesn't keep up with our costs.” Dr. Castellanos said that physicians would not look happily on the recommended update.

“Quite honestly, it's insulting,” he said. “The update is a blunt tool for trying to constrain costs,” said Dr. Castellanos, who voted against the update.

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase Medicare physician fees by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress next month but was discussed and voted on at a panel meeting in January.

The panel believes that physician fees should not be cut, said MedPAC chairman Glenn M. Hackbarth. “That's a very important message for us to convey to Congress.” Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers. “We try to zero in on the most appropriate update,” he said, adding that cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey. In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion. The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use. The reporting should be confidential for 2 years. After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla., and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% “doesn't keep up with our costs.” Dr. Castellanos said that physicians would not look happily on the recommended update.

“Quite honestly, it's insulting,” he said. “The update is a blunt tool for trying to constrain costs,” said Dr. Castellanos, who voted against the update.

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase Medicare physician fees by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress next month but was discussed and voted on at a panel meeting in January.

The panel believes that physician fees should not be cut, said MedPAC chairman Glenn M. Hackbarth. “That's a very important message for us to convey to Congress.” Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers. “We try to zero in on the most appropriate update,” he said, adding that cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey. In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion. The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use. The reporting should be confidential for 2 years. After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla., and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% “doesn't keep up with our costs.” Dr. Castellanos said that physicians would not look happily on the recommended update.

“Quite honestly, it's insulting,” he said. “The update is a blunt tool for trying to constrain costs,” said Dr. Castellanos, who voted against the update.

Physician-owned specialty hospitals are largely unprepared to handle emergencies and should be more closely tracked by the government to ensure that they comply with Medicare rules, according to a report from the Inspector General of the Department of Health and Human Services.

The IG's office reviewed written policies for managing medical emergencies, staffing schedules, and staffing policies for 8 days at 109 physician-owned facilities that were identified from a list provided by the Centers for Medicare and Medicaid Services. There are an unknown number of physician-owned specialty hospitals, according to the IG, which is urging the CMS to begin compiling a list.

Of the 109 hospitals surveyed, 66 were surgical, 23 were orthopedic, and 20 were cardiac hospitals. Eighteen of the cardiac hospitals had an emergency department; only 11 of the 23 orthopedic hospitals and 31 of the surgical hospitals had an ED. Thirty-three of the 109 hospitals were in Texas, 15 were in Louisiana, 9 in Oklahoma, 9 in Kansas, and 8 in South Dakota. The rest were spread across other states.

While half of the physician-owned hospitals surveyed had an emergency department, more than half of those EDs only had a single bed. Only 45% of the EDs had a physician on site at all times.

Ninety-three percent of the hospitals met Medicare staffing requirements: having a registered nurse on duty at all times, and a physician on call at all times. But seven hospitals did not have an RN on duty, and one hospital did not have a physician on call or on duty on at least 1 of the 8 days reviewed.

Two-thirds of the hospitals told staff to call 911 in case of emergency.

While transferring a patient with an emergent problem to another hospital's ED is acceptable, it might be a violation of Medicare conditions of participation if a hospital uses 911 to obtain medical assistance to stabilize a patient, according to the IG. Thirty-seven of the 109 hospitals (34%) engaged in that practice, the IG reported.

A hospital also is not in compliance if it uses 911 as a substitute for providing services required by the conditions of Medicare participation, noted the IG.

Almost 25% of the hospitals did not address in written policies the “appraisal of emergencies, initial treatment of emergencies, or referral and transfer of patients,” according to the report.

The IG urged the CMS to enforce Medicare staffing requirements. Hospitals should also have information in their written policies on how to manage a medical emergency, such as how to use emergency response equipment or how to follow lifesaving protocols, said the IG.

The CMS issued a written response to the IG that was included in the report. The agency said it agreed with the IG's recommendations and that it would examine current compliance through its routine hospital surveys. As many as 42% of the 109 hospitals would not have been subject to CMS oversight, however, according to the IG. Those facilities were instead accredited by the Joint Commission or the American Osteopathic Association.

Finally, the CMS said it would use its existing authority to require hospitals to have written policies and procedures on managing emergencies, but that it would also consider whether regulatory changes are needed to establish specific requirements for equipment and staff qualifications.

The report was requested by the Senate Finance Committee, whose leaders—Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.)—have a history of seeking restrictions on physician-owned specialty hospitals, and have successfully implemented moratoriums on new facilities.

These senators will likely introduce a new proposal to rein in specialty hospitals this spring, Molly Sandvig, executive director of Physician Hospitals of America, said in an interview.

Ms. Sandvig said that her organization—which represents 108 physician-owned facilities—believed that all hospitals should meet Medicare conditions of participation. However, not every hospital should have an emergency department, she said.

While transfers may be acceptable, “No hospital should use 911 as a substitute for providing proper care to patients,” said Ms. Sandvig. That practice is very limited, she said, alleging that the IG had misrepresented facilities' policies and practices.

Both the American Hospital Association and the Federation of American Hospitals pounced on the report, saying that it shows that physician-owned facilities are a threat to patient safety. “The report illustrates yet another reason why Congress needs to take action in the best interests of patients and ban physician self-referral to new limited-service hospitals they own and operate,” AHA Executive Vice President Rick Pollack said in a statement.

Physician-owned specialty hospitals are largely unprepared to handle emergencies and should be more closely tracked by the government to ensure that they comply with Medicare rules, according to a report from the Inspector General of the Department of Health and Human Services.

The IG's office reviewed written policies for managing medical emergencies, staffing schedules, and staffing policies for 8 days at 109 physician-owned facilities that were identified from a list provided by the Centers for Medicare and Medicaid Services. There are an unknown number of physician-owned specialty hospitals, according to the IG, which is urging the CMS to begin compiling a list.

Of the 109 hospitals surveyed, 66 were surgical, 23 were orthopedic, and 20 were cardiac hospitals. Eighteen of the cardiac hospitals had an emergency department; only 11 of the 23 orthopedic hospitals and 31 of the surgical hospitals had an ED. Thirty-three of the 109 hospitals were in Texas, 15 were in Louisiana, 9 in Oklahoma, 9 in Kansas, and 8 in South Dakota. The rest were spread across other states.

While half of the physician-owned hospitals surveyed had an emergency department, more than half of those EDs only had a single bed. Only 45% of the EDs had a physician on site at all times.

Ninety-three percent of the hospitals met Medicare staffing requirements: having a registered nurse on duty at all times, and a physician on call at all times. But seven hospitals did not have an RN on duty, and one hospital did not have a physician on call or on duty on at least 1 of the 8 days reviewed.

Two-thirds of the hospitals told staff to call 911 in case of emergency.

While transferring a patient with an emergent problem to another hospital's ED is acceptable, it might be a violation of Medicare conditions of participation if a hospital uses 911 to obtain medical assistance to stabilize a patient, according to the IG. Thirty-seven of the 109 hospitals (34%) engaged in that practice, the IG reported.

A hospital also is not in compliance if it uses 911 as a substitute for providing services required by the conditions of Medicare participation, noted the IG.

Almost 25% of the hospitals did not address in written policies the “appraisal of emergencies, initial treatment of emergencies, or referral and transfer of patients,” according to the report.

The IG urged the CMS to enforce Medicare staffing requirements. Hospitals should also have information in their written policies on how to manage a medical emergency, such as how to use emergency response equipment or how to follow lifesaving protocols, said the IG.

The CMS issued a written response to the IG that was included in the report. The agency said it agreed with the IG's recommendations and that it would examine current compliance through its routine hospital surveys. As many as 42% of the 109 hospitals would not have been subject to CMS oversight, however, according to the IG. Those facilities were instead accredited by the Joint Commission or the American Osteopathic Association.

Finally, the CMS said it would use its existing authority to require hospitals to have written policies and procedures on managing emergencies, but that it would also consider whether regulatory changes are needed to establish specific requirements for equipment and staff qualifications.

The report was requested by the Senate Finance Committee, whose leaders—Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.)—have a history of seeking restrictions on physician-owned specialty hospitals, and have successfully implemented moratoriums on new facilities.

These senators will likely introduce a new proposal to rein in specialty hospitals this spring, Molly Sandvig, executive director of Physician Hospitals of America, said in an interview.

Ms. Sandvig said that her organization—which represents 108 physician-owned facilities—believed that all hospitals should meet Medicare conditions of participation. However, not every hospital should have an emergency department, she said.

While transfers may be acceptable, “No hospital should use 911 as a substitute for providing proper care to patients,” said Ms. Sandvig. That practice is very limited, she said, alleging that the IG had misrepresented facilities' policies and practices.

Both the American Hospital Association and the Federation of American Hospitals pounced on the report, saying that it shows that physician-owned facilities are a threat to patient safety. “The report illustrates yet another reason why Congress needs to take action in the best interests of patients and ban physician self-referral to new limited-service hospitals they own and operate,” AHA Executive Vice President Rick Pollack said in a statement.

Physician-owned specialty hospitals are largely unprepared to handle emergencies and should be more closely tracked by the government to ensure that they comply with Medicare rules, according to a report from the Inspector General of the Department of Health and Human Services.

The IG's office reviewed written policies for managing medical emergencies, staffing schedules, and staffing policies for 8 days at 109 physician-owned facilities that were identified from a list provided by the Centers for Medicare and Medicaid Services. There are an unknown number of physician-owned specialty hospitals, according to the IG, which is urging the CMS to begin compiling a list.

Of the 109 hospitals surveyed, 66 were surgical, 23 were orthopedic, and 20 were cardiac hospitals. Eighteen of the cardiac hospitals had an emergency department; only 11 of the 23 orthopedic hospitals and 31 of the surgical hospitals had an ED. Thirty-three of the 109 hospitals were in Texas, 15 were in Louisiana, 9 in Oklahoma, 9 in Kansas, and 8 in South Dakota. The rest were spread across other states.

While half of the physician-owned hospitals surveyed had an emergency department, more than half of those EDs only had a single bed. Only 45% of the EDs had a physician on site at all times.

Ninety-three percent of the hospitals met Medicare staffing requirements: having a registered nurse on duty at all times, and a physician on call at all times. But seven hospitals did not have an RN on duty, and one hospital did not have a physician on call or on duty on at least 1 of the 8 days reviewed.

Two-thirds of the hospitals told staff to call 911 in case of emergency.

While transferring a patient with an emergent problem to another hospital's ED is acceptable, it might be a violation of Medicare conditions of participation if a hospital uses 911 to obtain medical assistance to stabilize a patient, according to the IG. Thirty-seven of the 109 hospitals (34%) engaged in that practice, the IG reported.

A hospital also is not in compliance if it uses 911 as a substitute for providing services required by the conditions of Medicare participation, noted the IG.

Almost 25% of the hospitals did not address in written policies the “appraisal of emergencies, initial treatment of emergencies, or referral and transfer of patients,” according to the report.

The IG urged the CMS to enforce Medicare staffing requirements. Hospitals should also have information in their written policies on how to manage a medical emergency, such as how to use emergency response equipment or how to follow lifesaving protocols, said the IG.

The CMS issued a written response to the IG that was included in the report. The agency said it agreed with the IG's recommendations and that it would examine current compliance through its routine hospital surveys. As many as 42% of the 109 hospitals would not have been subject to CMS oversight, however, according to the IG. Those facilities were instead accredited by the Joint Commission or the American Osteopathic Association.

Finally, the CMS said it would use its existing authority to require hospitals to have written policies and procedures on managing emergencies, but that it would also consider whether regulatory changes are needed to establish specific requirements for equipment and staff qualifications.

The report was requested by the Senate Finance Committee, whose leaders—Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.)—have a history of seeking restrictions on physician-owned specialty hospitals, and have successfully implemented moratoriums on new facilities.

These senators will likely introduce a new proposal to rein in specialty hospitals this spring, Molly Sandvig, executive director of Physician Hospitals of America, said in an interview.

Ms. Sandvig said that her organization—which represents 108 physician-owned facilities—believed that all hospitals should meet Medicare conditions of participation. However, not every hospital should have an emergency department, she said.

While transfers may be acceptable, “No hospital should use 911 as a substitute for providing proper care to patients,” said Ms. Sandvig. That practice is very limited, she said, alleging that the IG had misrepresented facilities' policies and practices.

Both the American Hospital Association and the Federation of American Hospitals pounced on the report, saying that it shows that physician-owned facilities are a threat to patient safety. “The report illustrates yet another reason why Congress needs to take action in the best interests of patients and ban physician self-referral to new limited-service hospitals they own and operate,” AHA Executive Vice President Rick Pollack said in a statement.

The Centers for Medicare and Medicaid Services will increase payments for outpatient services by an average of 3.8% in 2008, with most of the neurologic, cardiac, and gynecologic procedures covered under the payment system being slated for small to moderate increases.

Overall, hospitals will be paid about $36 billion in 2008, a 10% increase from 2007, and $1 billion more than was estimated in the proposed outpatient rule, according to CMS.

The 2008 Hospital Outpatient Prospective Payment System final rule also includes a revised method of paying for services in ambulatory surgical centers. Starting in 2008, services performed in ASCs will be reimbursed at 65% of the rate paid for the same service in an outpatient hospital department. This rate is unchanged from the proposed rule.

“The revised system takes a major step toward eliminating financial incentives for choosing one care setting over another, thereby placing patients' needs first, increasing efficiencies, and leading to savings for both beneficiaries and the Medicare program,” said CMS Acting Administrator Kerry Weems.

Hospitals will be required to report on seven quality measures, including five emergency department measures pertaining to transfer of acute myocardial infarction patients, and two surgical care improvement measures. Under the proposed rule, hospitals were going to be required to report on 10 measures. Three were dropped in the final rule: administration of an ACE inhibitor to heart failure patients, empiric antibiotics for community-acquired pneumonia, and hemoglobin A_1c control. Now, if hospitals do not report on the seven measures, they will get an automatic 2% reduction in inpatient pay in 2009, according to CMS.

CMS also said it was issuing three new composite ambulatory payment classification (APC) groups. The APC bundles frequently performed procedures into a single payment, thus creating an episode-of-care-based payment. The new APCs in the final rule are for extended outpatient visits with observation, low dose-rate prostate brachytherapy, and cardiac electrophysiologic evaluation and ablation.

The agency is continuing its policy of bundling payments for certain ancillary services, to create efficiencies and to give hospitals more flexibility to manage costs. Some of the services that will now be covered by a bundled payment include image processing services, intraoperative services, and imaging supervision and interpretation services.

Dr. Kim Allan Williams, nuclear cardiology director at the University of Chicago, said bundled payments can often mean that a service is not properly reimbursed. But under the outpatient payment system, CMS has found a way to make sure that every service is appropriately covered, said Dr. Williams in an interview.

Most cardiac procedures are slated for an increase—from a modest 1.9% for pacemaker insertion or replacement, to 5.2% for bare metal stents, to 13.3% for drug-eluting stents. Implantation of left ventricular pacing leads (add-on) will be cut by 12.4%, but that comes on the heels of 3 years of 80%–180% increases.

Some neurologic device implant procedures will also see a reimbursement increase. Neurostimulators, used primarily for lessening of symptoms of movement disorders such as Parkinson's disease and essential tremor, as well as control of epilepsy and pain, are slated for a 3.1% increase. The electrodes required with the devices will see a 3.4% rise in payment.

The changes aren't enough to have any impact on the numbers of these procedures being done, said Dr. Rajesh Pahwa, director of the Parkinson's Disease and Movement Disorder Center at the University of Kansas, Kansas City. For gynecologic procedures, endometrial ablation will get a 17.9% increase in pay, and surgical hysteroscopy a 4.2% increase.

The Centers for Medicare and Medicaid Services will increase payments for outpatient services by an average of 3.8% in 2008, with most of the neurologic, cardiac, and gynecologic procedures covered under the payment system being slated for small to moderate increases.

Overall, hospitals will be paid about $36 billion in 2008, a 10% increase from 2007, and $1 billion more than was estimated in the proposed outpatient rule, according to CMS.

The 2008 Hospital Outpatient Prospective Payment System final rule also includes a revised method of paying for services in ambulatory surgical centers. Starting in 2008, services performed in ASCs will be reimbursed at 65% of the rate paid for the same service in an outpatient hospital department. This rate is unchanged from the proposed rule.

“The revised system takes a major step toward eliminating financial incentives for choosing one care setting over another, thereby placing patients' needs first, increasing efficiencies, and leading to savings for both beneficiaries and the Medicare program,” said CMS Acting Administrator Kerry Weems.

Hospitals will be required to report on seven quality measures, including five emergency department measures pertaining to transfer of acute myocardial infarction patients, and two surgical care improvement measures. Under the proposed rule, hospitals were going to be required to report on 10 measures. Three were dropped in the final rule: administration of an ACE inhibitor to heart failure patients, empiric antibiotics for community-acquired pneumonia, and hemoglobin A_1c control. Now, if hospitals do not report on the seven measures, they will get an automatic 2% reduction in inpatient pay in 2009, according to CMS.

CMS also said it was issuing three new composite ambulatory payment classification (APC) groups. The APC bundles frequently performed procedures into a single payment, thus creating an episode-of-care-based payment. The new APCs in the final rule are for extended outpatient visits with observation, low dose-rate prostate brachytherapy, and cardiac electrophysiologic evaluation and ablation.

The agency is continuing its policy of bundling payments for certain ancillary services, to create efficiencies and to give hospitals more flexibility to manage costs. Some of the services that will now be covered by a bundled payment include image processing services, intraoperative services, and imaging supervision and interpretation services.

Dr. Kim Allan Williams, nuclear cardiology director at the University of Chicago, said bundled payments can often mean that a service is not properly reimbursed. But under the outpatient payment system, CMS has found a way to make sure that every service is appropriately covered, said Dr. Williams in an interview.

Most cardiac procedures are slated for an increase—from a modest 1.9% for pacemaker insertion or replacement, to 5.2% for bare metal stents, to 13.3% for drug-eluting stents. Implantation of left ventricular pacing leads (add-on) will be cut by 12.4%, but that comes on the heels of 3 years of 80%–180% increases.

Some neurologic device implant procedures will also see a reimbursement increase. Neurostimulators, used primarily for lessening of symptoms of movement disorders such as Parkinson's disease and essential tremor, as well as control of epilepsy and pain, are slated for a 3.1% increase. The electrodes required with the devices will see a 3.4% rise in payment.

The changes aren't enough to have any impact on the numbers of these procedures being done, said Dr. Rajesh Pahwa, director of the Parkinson's Disease and Movement Disorder Center at the University of Kansas, Kansas City. For gynecologic procedures, endometrial ablation will get a 17.9% increase in pay, and surgical hysteroscopy a 4.2% increase.

The Centers for Medicare and Medicaid Services will increase payments for outpatient services by an average of 3.8% in 2008, with most of the neurologic, cardiac, and gynecologic procedures covered under the payment system being slated for small to moderate increases.

Overall, hospitals will be paid about $36 billion in 2008, a 10% increase from 2007, and $1 billion more than was estimated in the proposed outpatient rule, according to CMS.

The 2008 Hospital Outpatient Prospective Payment System final rule also includes a revised method of paying for services in ambulatory surgical centers. Starting in 2008, services performed in ASCs will be reimbursed at 65% of the rate paid for the same service in an outpatient hospital department. This rate is unchanged from the proposed rule.

“The revised system takes a major step toward eliminating financial incentives for choosing one care setting over another, thereby placing patients' needs first, increasing efficiencies, and leading to savings for both beneficiaries and the Medicare program,” said CMS Acting Administrator Kerry Weems.

Hospitals will be required to report on seven quality measures, including five emergency department measures pertaining to transfer of acute myocardial infarction patients, and two surgical care improvement measures. Under the proposed rule, hospitals were going to be required to report on 10 measures. Three were dropped in the final rule: administration of an ACE inhibitor to heart failure patients, empiric antibiotics for community-acquired pneumonia, and hemoglobin A_1c control. Now, if hospitals do not report on the seven measures, they will get an automatic 2% reduction in inpatient pay in 2009, according to CMS.

CMS also said it was issuing three new composite ambulatory payment classification (APC) groups. The APC bundles frequently performed procedures into a single payment, thus creating an episode-of-care-based payment. The new APCs in the final rule are for extended outpatient visits with observation, low dose-rate prostate brachytherapy, and cardiac electrophysiologic evaluation and ablation.

The agency is continuing its policy of bundling payments for certain ancillary services, to create efficiencies and to give hospitals more flexibility to manage costs. Some of the services that will now be covered by a bundled payment include image processing services, intraoperative services, and imaging supervision and interpretation services.

Dr. Kim Allan Williams, nuclear cardiology director at the University of Chicago, said bundled payments can often mean that a service is not properly reimbursed. But under the outpatient payment system, CMS has found a way to make sure that every service is appropriately covered, said Dr. Williams in an interview.

Most cardiac procedures are slated for an increase—from a modest 1.9% for pacemaker insertion or replacement, to 5.2% for bare metal stents, to 13.3% for drug-eluting stents. Implantation of left ventricular pacing leads (add-on) will be cut by 12.4%, but that comes on the heels of 3 years of 80%–180% increases.

Some neurologic device implant procedures will also see a reimbursement increase. Neurostimulators, used primarily for lessening of symptoms of movement disorders such as Parkinson's disease and essential tremor, as well as control of epilepsy and pain, are slated for a 3.1% increase. The electrodes required with the devices will see a 3.4% rise in payment.

The changes aren't enough to have any impact on the numbers of these procedures being done, said Dr. Rajesh Pahwa, director of the Parkinson's Disease and Movement Disorder Center at the University of Kansas, Kansas City. For gynecologic procedures, endometrial ablation will get a 17.9% increase in pay, and surgical hysteroscopy a 4.2% increase.

Costs Higher With Managed Care

Although managed care can reduce the state's cost of caring for individuals with severe mental illness who are receiving Medicaid, it may actually increase the burden for the patients, according to a new study that was led by researchers at the Louis de la Parte Florida Mental Health Institute at the University of South Florida. The study compared costs in two Medicaid managed care plans with a standard fee-for-service Medicaid plan. Medicaid saved money with the managed care plans, but the patients in the fee-for-service plan had “significantly lower costs” than those who were in managed care. Managed care costs were higher because patients relied more on family caregiving, according to the authors. “For adults with severe mental illness, it appears that efforts to contain Medicaid mental health costs may result in deflecting costs back to these vulnerable persons and onto their families and friends,” the authors concluded. The study was published on-line in the American Journal of Psychiatry on Jan. 15.

Drug Prevention Grants Available

The White House Office on National Drug Control and the Substance Abuse and Mental Health Services Administration (SAMHSA) are making $19 million available to fund Drug-Free Communities Support Programs. The program was created in 1997 and given a 5-year reauthorization in 2006. The grants are aimed at supporting community-based programs to prevent and reduce substance abuse. Each grantee will receive up to $125,000 per year in federal matching funds for a 5-year cycle. The application deadline is March 21.

HHS Names Autism Panel

The Health and Human Services department has named a new committee, authorized under the Combating Autism Act of 2006, to facilitate the exchange of information on autism activities among federal agencies as well as coordinate autism-related programs and initiatives, according to a statement from HHS. Dr. Thomas R. Insel, director of the National Institutes of Mental Health, will chair the panel; its first task will be to develop a strategic plan for autism research to guide public and private investments.

Scant Number of New Approvals

The Food and Drug Administration approved only 17 new molecular entities (NMEs) in 2007, the lowest number since 2002. This comes on the heels of two previous years with only 18 NME approvals each. NMEs are unique products. Those approved in 2007 included two HIV therapies; four oncology products; two antihypertensives; one antibiotic; and one NME each to treat Parkinson's disease, pulmonary hypertension, impetigo, acromegaly, attention-deficit hyperactivity disorder, and phenylketonuria. Also approved were an imaging agent and injection to prevent the loss of blood volume during surgery as well as a handful of biologics, an influenza vaccine, and an avian flu vaccine.

Coverage Improves Health

Uninsured adults 55-64 years old, particularly those with cardiovascular disease or diabetes, saw their health improve significantly once they became eligible for Medicare, a study from Harvard Medical School, Boston, reported. The study looked at more than 5,000 adults who were continuously insured and more than 2,200 who were uninsured persistently or intermittently in the decade before they became eligible for Medicare. The researchers found that, compared with previously insured adults, previously uninsured adults reported significantly improved health trends after age 65, both overall and for measures related to mobility, agility, and adverse cardiovascular outcomes. Depressive symptoms did not improve significantly in uninsured individuals with these other conditions once they became eligible for Medicare, but depressive symptoms did improve in previously uninsured adults without these other conditions once they became eligible for Medicare. By age 70, the differences in health status between the previously uninsured and those who had been insured continuously were reduced by about half. The study appeared in the Dec. 26 issue of JAMA.

Consortium Starts Genome Project

A consortium of research organizations from around the world, including the National Human Genome Research Institute, is planning to sequence the genomes of at least 1,000 individuals. The idea, being called the 1000 Genomes Project, is to create a detailed and clinically relevant picture of human genetic variation. The data from the project will be made publicly available at no cost. “This new project will increase the sensitivity of disease discovery efforts across the genome fivefold and within gene regions at least 10-fold,” Dr. Francis S. Collins, director of the National Human Genome Research Institute, said in a statement. “Our existing databases do a reasonably good job of cataloging variations found in at least 10 percent of a population. By harnessing the power of new sequencing technologies and novel computational methods, we hope to give biomedical researchers a genome-wide map of variation down to the 1 percent level.” The project is being supported by the Wellcome Trust Sanger Institute in Hinxton, England; the Beijing Genomics Institute; BGI Shenzhen in China; and the National Human Genome Research Institute, part of the National Institutes of Health. More information about the project is available online at

www.1000genomes.org

Costs Higher With Managed Care

Although managed care can reduce the state's cost of caring for individuals with severe mental illness who are receiving Medicaid, it may actually increase the burden for the patients, according to a new study that was led by researchers at the Louis de la Parte Florida Mental Health Institute at the University of South Florida. The study compared costs in two Medicaid managed care plans with a standard fee-for-service Medicaid plan. Medicaid saved money with the managed care plans, but the patients in the fee-for-service plan had “significantly lower costs” than those who were in managed care. Managed care costs were higher because patients relied more on family caregiving, according to the authors. “For adults with severe mental illness, it appears that efforts to contain Medicaid mental health costs may result in deflecting costs back to these vulnerable persons and onto their families and friends,” the authors concluded. The study was published on-line in the American Journal of Psychiatry on Jan. 15.

Drug Prevention Grants Available

The White House Office on National Drug Control and the Substance Abuse and Mental Health Services Administration (SAMHSA) are making $19 million available to fund Drug-Free Communities Support Programs. The program was created in 1997 and given a 5-year reauthorization in 2006. The grants are aimed at supporting community-based programs to prevent and reduce substance abuse. Each grantee will receive up to $125,000 per year in federal matching funds for a 5-year cycle. The application deadline is March 21.

HHS Names Autism Panel

The Health and Human Services department has named a new committee, authorized under the Combating Autism Act of 2006, to facilitate the exchange of information on autism activities among federal agencies as well as coordinate autism-related programs and initiatives, according to a statement from HHS. Dr. Thomas R. Insel, director of the National Institutes of Mental Health, will chair the panel; its first task will be to develop a strategic plan for autism research to guide public and private investments.

Scant Number of New Approvals

The Food and Drug Administration approved only 17 new molecular entities (NMEs) in 2007, the lowest number since 2002. This comes on the heels of two previous years with only 18 NME approvals each. NMEs are unique products. Those approved in 2007 included two HIV therapies; four oncology products; two antihypertensives; one antibiotic; and one NME each to treat Parkinson's disease, pulmonary hypertension, impetigo, acromegaly, attention-deficit hyperactivity disorder, and phenylketonuria. Also approved were an imaging agent and injection to prevent the loss of blood volume during surgery as well as a handful of biologics, an influenza vaccine, and an avian flu vaccine.

Coverage Improves Health

Uninsured adults 55-64 years old, particularly those with cardiovascular disease or diabetes, saw their health improve significantly once they became eligible for Medicare, a study from Harvard Medical School, Boston, reported. The study looked at more than 5,000 adults who were continuously insured and more than 2,200 who were uninsured persistently or intermittently in the decade before they became eligible for Medicare. The researchers found that, compared with previously insured adults, previously uninsured adults reported significantly improved health trends after age 65, both overall and for measures related to mobility, agility, and adverse cardiovascular outcomes. Depressive symptoms did not improve significantly in uninsured individuals with these other conditions once they became eligible for Medicare, but depressive symptoms did improve in previously uninsured adults without these other conditions once they became eligible for Medicare. By age 70, the differences in health status between the previously uninsured and those who had been insured continuously were reduced by about half. The study appeared in the Dec. 26 issue of JAMA.

Consortium Starts Genome Project

A consortium of research organizations from around the world, including the National Human Genome Research Institute, is planning to sequence the genomes of at least 1,000 individuals. The idea, being called the 1000 Genomes Project, is to create a detailed and clinically relevant picture of human genetic variation. The data from the project will be made publicly available at no cost. “This new project will increase the sensitivity of disease discovery efforts across the genome fivefold and within gene regions at least 10-fold,” Dr. Francis S. Collins, director of the National Human Genome Research Institute, said in a statement. “Our existing databases do a reasonably good job of cataloging variations found in at least 10 percent of a population. By harnessing the power of new sequencing technologies and novel computational methods, we hope to give biomedical researchers a genome-wide map of variation down to the 1 percent level.” The project is being supported by the Wellcome Trust Sanger Institute in Hinxton, England; the Beijing Genomics Institute; BGI Shenzhen in China; and the National Human Genome Research Institute, part of the National Institutes of Health. More information about the project is available online at

www.1000genomes.org

Costs Higher With Managed Care

Although managed care can reduce the state's cost of caring for individuals with severe mental illness who are receiving Medicaid, it may actually increase the burden for the patients, according to a new study that was led by researchers at the Louis de la Parte Florida Mental Health Institute at the University of South Florida. The study compared costs in two Medicaid managed care plans with a standard fee-for-service Medicaid plan. Medicaid saved money with the managed care plans, but the patients in the fee-for-service plan had “significantly lower costs” than those who were in managed care. Managed care costs were higher because patients relied more on family caregiving, according to the authors. “For adults with severe mental illness, it appears that efforts to contain Medicaid mental health costs may result in deflecting costs back to these vulnerable persons and onto their families and friends,” the authors concluded. The study was published on-line in the American Journal of Psychiatry on Jan. 15.

Drug Prevention Grants Available

The White House Office on National Drug Control and the Substance Abuse and Mental Health Services Administration (SAMHSA) are making $19 million available to fund Drug-Free Communities Support Programs. The program was created in 1997 and given a 5-year reauthorization in 2006. The grants are aimed at supporting community-based programs to prevent and reduce substance abuse. Each grantee will receive up to $125,000 per year in federal matching funds for a 5-year cycle. The application deadline is March 21.

HHS Names Autism Panel

The Health and Human Services department has named a new committee, authorized under the Combating Autism Act of 2006, to facilitate the exchange of information on autism activities among federal agencies as well as coordinate autism-related programs and initiatives, according to a statement from HHS. Dr. Thomas R. Insel, director of the National Institutes of Mental Health, will chair the panel; its first task will be to develop a strategic plan for autism research to guide public and private investments.

Scant Number of New Approvals

The Food and Drug Administration approved only 17 new molecular entities (NMEs) in 2007, the lowest number since 2002. This comes on the heels of two previous years with only 18 NME approvals each. NMEs are unique products. Those approved in 2007 included two HIV therapies; four oncology products; two antihypertensives; one antibiotic; and one NME each to treat Parkinson's disease, pulmonary hypertension, impetigo, acromegaly, attention-deficit hyperactivity disorder, and phenylketonuria. Also approved were an imaging agent and injection to prevent the loss of blood volume during surgery as well as a handful of biologics, an influenza vaccine, and an avian flu vaccine.

Coverage Improves Health

Uninsured adults 55-64 years old, particularly those with cardiovascular disease or diabetes, saw their health improve significantly once they became eligible for Medicare, a study from Harvard Medical School, Boston, reported. The study looked at more than 5,000 adults who were continuously insured and more than 2,200 who were uninsured persistently or intermittently in the decade before they became eligible for Medicare. The researchers found that, compared with previously insured adults, previously uninsured adults reported significantly improved health trends after age 65, both overall and for measures related to mobility, agility, and adverse cardiovascular outcomes. Depressive symptoms did not improve significantly in uninsured individuals with these other conditions once they became eligible for Medicare, but depressive symptoms did improve in previously uninsured adults without these other conditions once they became eligible for Medicare. By age 70, the differences in health status between the previously uninsured and those who had been insured continuously were reduced by about half. The study appeared in the Dec. 26 issue of JAMA.

Consortium Starts Genome Project

A consortium of research organizations from around the world, including the National Human Genome Research Institute, is planning to sequence the genomes of at least 1,000 individuals. The idea, being called the 1000 Genomes Project, is to create a detailed and clinically relevant picture of human genetic variation. The data from the project will be made publicly available at no cost. “This new project will increase the sensitivity of disease discovery efforts across the genome fivefold and within gene regions at least 10-fold,” Dr. Francis S. Collins, director of the National Human Genome Research Institute, said in a statement. “Our existing databases do a reasonably good job of cataloging variations found in at least 10 percent of a population. By harnessing the power of new sequencing technologies and novel computational methods, we hope to give biomedical researchers a genome-wide map of variation down to the 1 percent level.” The project is being supported by the Wellcome Trust Sanger Institute in Hinxton, England; the Beijing Genomics Institute; BGI Shenzhen in China; and the National Human Genome Research Institute, part of the National Institutes of Health. More information about the project is available online at

www.1000genomes.org

WASHINGTON – Some Alzheimer's disease-related groups–but not all–are stepping up calls for earlier and more frequent cognition screening, citing an aging population increasingly at risk for dementia.

The disease affects 1 in 10 people older than age 65 years, and almost half of those older than age 85 years, according to the Alzheimer's Foundation of America. It is the seventh leading cause of death in the United States.

A cognition screen can establish a baseline, and be used to prompt referrals to clinicians who can pinpoint the cause of memory loss or loss of executive functioning, Eric J. Hall, CEO of the New York-based AFA, said in an interview.

Knowing of an Alzheimer's diagnosis early in the disease progression helps patients and families prepare, and early intervention can improve quality of life, he said.

The AFA has been seeking coverage of cognition screening as part of the “Welcome to Medicare” exam. The exam is offered during the first 6 months of Medicare Part B coverage; beneficiaries pay 20% of the cost, if they've met the deductible. If they have not met the deductible, they may be liable for the exam's entire cost.

To add cognition screening would require an act of Congress, according to a spokesperson at the Centers for Medicare and Medicaid Services.

The AFA's call for early screening and coverage was echoed by a group of experts convened by Pfizer Inc. and Eisai Inc., who issued a consensus statement in November. Pfizer and Eisai manufacture Aricept (donepezil), an Alzheimer's drug.

In the consensus document, the Alzheimer's Disease Screening Discussion Group urged all adults aged 65 years and older to seek cognition screening during a physical exam. Screening should be conducted on those with a strong family history of the disease or those who are concerned about memory problems, as well as on anyone admitted to an assisted-living or long-term care facility, said the seven-member panel.

Two of the panelists are paid speakers for Pfizer: Paul Solomon, Ph.D., who is clinical director of the memory clinic at Williams College, Williamstown, Mass., and Dr. Barry W. Rovner, who serves as director of clinical Alzheimer's disease research at Jefferson Medical College, Philadelphia.

At a briefing on the consensus document, Dr. Solomon said there are a number of validated cognition screening tools that can be used by practitioners, including the Mini-Mental State Examination, verbal fluency test, and clock-drawing test. “A delay in diagnosis can undermine Alzheimer's patients and their families in [their] ability to plan financially, socially, emotionally, and medically for the future,” he said.

Dr. Rovner called for more training during medical school and residency on the importance of cognition screening, and for more education programs to target primary care physicians and the public.

Patients aren't talking with physicians about memory loss, according to an AFA survey of 1,902 people who participated in the organization's National Memory Screening Day in 2006. Of the survey respondents, 97% had never been given a memory test.

Of those surveyed, 80% said they had visited a primary care physician within the last 6 months, but fewer than 10% of those with self-identified memory problems had talked about them with their doctor.

The 2007 National Memory Screening Day was held in mid-November at 2,000 sites in 46 states, including 1,100 Kmart pharmacies. The AFA is supported by drug company grants and private donations. Memory Screening Day participants are given access to a special Web site that contains education materials and three cognition tests recommended by the AFA's Memory Screening Advisory Board.

The Chicago-based Alzheimer's Association does not see the wisdom of such health fair-type screening events, William Thies, Ph.D., vice president of medical and scientific relations, said in an interview. Patients may not get enough encouragement to talk with their physicians, and the tests used for screening are often not sensitive or specific enough, thus potentially leading to false-negative or false-positive results, he said.

“But we know it's a good thing for people to talk to their physicians about any memory concerns they have,” Dr. Thies said, adding that the Alzheimer's Association encourages physicians to conduct more “cognitive surveillance.”

Once a dialogue has started, physicians can determine whether the patient is just worried or if diagnostics are necessary, Dr. Thies said.

WASHINGTON – Some Alzheimer's disease-related groups–but not all–are stepping up calls for earlier and more frequent cognition screening, citing an aging population increasingly at risk for dementia.

The disease affects 1 in 10 people older than age 65 years, and almost half of those older than age 85 years, according to the Alzheimer's Foundation of America. It is the seventh leading cause of death in the United States.

A cognition screen can establish a baseline, and be used to prompt referrals to clinicians who can pinpoint the cause of memory loss or loss of executive functioning, Eric J. Hall, CEO of the New York-based AFA, said in an interview.

Knowing of an Alzheimer's diagnosis early in the disease progression helps patients and families prepare, and early intervention can improve quality of life, he said.

The AFA has been seeking coverage of cognition screening as part of the “Welcome to Medicare” exam. The exam is offered during the first 6 months of Medicare Part B coverage; beneficiaries pay 20% of the cost, if they've met the deductible. If they have not met the deductible, they may be liable for the exam's entire cost.

To add cognition screening would require an act of Congress, according to a spokesperson at the Centers for Medicare and Medicaid Services.

The AFA's call for early screening and coverage was echoed by a group of experts convened by Pfizer Inc. and Eisai Inc., who issued a consensus statement in November. Pfizer and Eisai manufacture Aricept (donepezil), an Alzheimer's drug.

In the consensus document, the Alzheimer's Disease Screening Discussion Group urged all adults aged 65 years and older to seek cognition screening during a physical exam. Screening should be conducted on those with a strong family history of the disease or those who are concerned about memory problems, as well as on anyone admitted to an assisted-living or long-term care facility, said the seven-member panel.

Two of the panelists are paid speakers for Pfizer: Paul Solomon, Ph.D., who is clinical director of the memory clinic at Williams College, Williamstown, Mass., and Dr. Barry W. Rovner, who serves as director of clinical Alzheimer's disease research at Jefferson Medical College, Philadelphia.

At a briefing on the consensus document, Dr. Solomon said there are a number of validated cognition screening tools that can be used by practitioners, including the Mini-Mental State Examination, verbal fluency test, and clock-drawing test. “A delay in diagnosis can undermine Alzheimer's patients and their families in [their] ability to plan financially, socially, emotionally, and medically for the future,” he said.

Dr. Rovner called for more training during medical school and residency on the importance of cognition screening, and for more education programs to target primary care physicians and the public.

Patients aren't talking with physicians about memory loss, according to an AFA survey of 1,902 people who participated in the organization's National Memory Screening Day in 2006. Of the survey respondents, 97% had never been given a memory test.

Of those surveyed, 80% said they had visited a primary care physician within the last 6 months, but fewer than 10% of those with self-identified memory problems had talked about them with their doctor.

The 2007 National Memory Screening Day was held in mid-November at 2,000 sites in 46 states, including 1,100 Kmart pharmacies. The AFA is supported by drug company grants and private donations. Memory Screening Day participants are given access to a special Web site that contains education materials and three cognition tests recommended by the AFA's Memory Screening Advisory Board.

The Chicago-based Alzheimer's Association does not see the wisdom of such health fair-type screening events, William Thies, Ph.D., vice president of medical and scientific relations, said in an interview. Patients may not get enough encouragement to talk with their physicians, and the tests used for screening are often not sensitive or specific enough, thus potentially leading to false-negative or false-positive results, he said.

“But we know it's a good thing for people to talk to their physicians about any memory concerns they have,” Dr. Thies said, adding that the Alzheimer's Association encourages physicians to conduct more “cognitive surveillance.”

Once a dialogue has started, physicians can determine whether the patient is just worried or if diagnostics are necessary, Dr. Thies said.

WASHINGTON – Some Alzheimer's disease-related groups–but not all–are stepping up calls for earlier and more frequent cognition screening, citing an aging population increasingly at risk for dementia.

The disease affects 1 in 10 people older than age 65 years, and almost half of those older than age 85 years, according to the Alzheimer's Foundation of America. It is the seventh leading cause of death in the United States.

A cognition screen can establish a baseline, and be used to prompt referrals to clinicians who can pinpoint the cause of memory loss or loss of executive functioning, Eric J. Hall, CEO of the New York-based AFA, said in an interview.

Knowing of an Alzheimer's diagnosis early in the disease progression helps patients and families prepare, and early intervention can improve quality of life, he said.

The AFA has been seeking coverage of cognition screening as part of the “Welcome to Medicare” exam. The exam is offered during the first 6 months of Medicare Part B coverage; beneficiaries pay 20% of the cost, if they've met the deductible. If they have not met the deductible, they may be liable for the exam's entire cost.

To add cognition screening would require an act of Congress, according to a spokesperson at the Centers for Medicare and Medicaid Services.

The AFA's call for early screening and coverage was echoed by a group of experts convened by Pfizer Inc. and Eisai Inc., who issued a consensus statement in November. Pfizer and Eisai manufacture Aricept (donepezil), an Alzheimer's drug.

In the consensus document, the Alzheimer's Disease Screening Discussion Group urged all adults aged 65 years and older to seek cognition screening during a physical exam. Screening should be conducted on those with a strong family history of the disease or those who are concerned about memory problems, as well as on anyone admitted to an assisted-living or long-term care facility, said the seven-member panel.

Two of the panelists are paid speakers for Pfizer: Paul Solomon, Ph.D., who is clinical director of the memory clinic at Williams College, Williamstown, Mass., and Dr. Barry W. Rovner, who serves as director of clinical Alzheimer's disease research at Jefferson Medical College, Philadelphia.

At a briefing on the consensus document, Dr. Solomon said there are a number of validated cognition screening tools that can be used by practitioners, including the Mini-Mental State Examination, verbal fluency test, and clock-drawing test. “A delay in diagnosis can undermine Alzheimer's patients and their families in [their] ability to plan financially, socially, emotionally, and medically for the future,” he said.

Dr. Rovner called for more training during medical school and residency on the importance of cognition screening, and for more education programs to target primary care physicians and the public.

Patients aren't talking with physicians about memory loss, according to an AFA survey of 1,902 people who participated in the organization's National Memory Screening Day in 2006. Of the survey respondents, 97% had never been given a memory test.

Of those surveyed, 80% said they had visited a primary care physician within the last 6 months, but fewer than 10% of those with self-identified memory problems had talked about them with their doctor.

The 2007 National Memory Screening Day was held in mid-November at 2,000 sites in 46 states, including 1,100 Kmart pharmacies. The AFA is supported by drug company grants and private donations. Memory Screening Day participants are given access to a special Web site that contains education materials and three cognition tests recommended by the AFA's Memory Screening Advisory Board.

The Chicago-based Alzheimer's Association does not see the wisdom of such health fair-type screening events, William Thies, Ph.D., vice president of medical and scientific relations, said in an interview. Patients may not get enough encouragement to talk with their physicians, and the tests used for screening are often not sensitive or specific enough, thus potentially leading to false-negative or false-positive results, he said.

“But we know it's a good thing for people to talk to their physicians about any memory concerns they have,” Dr. Thies said, adding that the Alzheimer's Association encourages physicians to conduct more “cognitive surveillance.”

Once a dialogue has started, physicians can determine whether the patient is just worried or if diagnostics are necessary, Dr. Thies said.

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase the fees that physicians receive from Medicare by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress next month but was discussed and voted on at a panel meeting in January.

The panel believes that physician fees should not be cut, said MedPAC Chairman Glenn M. Hackbarth. “That's a very important message for us to convey to Congress.”

Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers.

“We try to zero in on the most appropriate update,” he said, adding that information on cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey.

In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped slightly to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion.

The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use.

The reporting should be confidential for 2 years.

After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla. and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% “doesn't keep up with our costs.”

Dr. Castellanos said that physicians would not look happily on the recommended update.

“Quite honestly, it's insulting,” he said. “The update is a blunt tool for trying to constrain costs,” said Dr. Castellanos, who voted against the update.

Dr. Nicholas Wolter, a commissioner who practices at a clinic in Billings, Mont., also said that he was not comfortable with the recommendation.

“Unless we start focusing on other tactics, we're not going to get a handle on costs,” Dr. Wolter commented.

Mr. Hackbarth noted that the panel's recommendation should not be taken to mean that the commission believes that everything is fine with the reimbursement system.

But, he added, the problems with Medicare threatened beneficiaries, taxpayers, and even his children's future.

Solutions should not be focused only on physicians, said Mr. Hackbarth, adding, “it's way bigger than that.”

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase the fees that physicians receive from Medicare by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress next month but was discussed and voted on at a panel meeting in January.

The panel believes that physician fees should not be cut, said MedPAC Chairman Glenn M. Hackbarth. “That's a very important message for us to convey to Congress.”

Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers.

“We try to zero in on the most appropriate update,” he said, adding that information on cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey.

In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped slightly to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion.

The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use.

The reporting should be confidential for 2 years.

After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla. and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% “doesn't keep up with our costs.”

Dr. Castellanos said that physicians would not look happily on the recommended update.

“Quite honestly, it's insulting,” he said. “The update is a blunt tool for trying to constrain costs,” said Dr. Castellanos, who voted against the update.

Dr. Nicholas Wolter, a commissioner who practices at a clinic in Billings, Mont., also said that he was not comfortable with the recommendation.

“Unless we start focusing on other tactics, we're not going to get a handle on costs,” Dr. Wolter commented.

Mr. Hackbarth noted that the panel's recommendation should not be taken to mean that the commission believes that everything is fine with the reimbursement system.

But, he added, the problems with Medicare threatened beneficiaries, taxpayers, and even his children's future.

Solutions should not be focused only on physicians, said Mr. Hackbarth, adding, “it's way bigger than that.”

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase the fees that physicians receive from Medicare by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress next month but was discussed and voted on at a panel meeting in January.

The panel believes that physician fees should not be cut, said MedPAC Chairman Glenn M. Hackbarth. “That's a very important message for us to convey to Congress.”

Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers.

“We try to zero in on the most appropriate update,” he said, adding that information on cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey.

In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped slightly to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion.

The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use.

The reporting should be confidential for 2 years.

After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla. and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% “doesn't keep up with our costs.”

Dr. Castellanos said that physicians would not look happily on the recommended update.

“Quite honestly, it's insulting,” he said. “The update is a blunt tool for trying to constrain costs,” said Dr. Castellanos, who voted against the update.

Dr. Nicholas Wolter, a commissioner who practices at a clinic in Billings, Mont., also said that he was not comfortable with the recommendation.

“Unless we start focusing on other tactics, we're not going to get a handle on costs,” Dr. Wolter commented.

Mr. Hackbarth noted that the panel's recommendation should not be taken to mean that the commission believes that everything is fine with the reimbursement system.

But, he added, the problems with Medicare threatened beneficiaries, taxpayers, and even his children's future.

Solutions should not be focused only on physicians, said Mr. Hackbarth, adding, “it's way bigger than that.”

WASHINGTON — The nation spent $2 trillion, or $7,000 per person, on health care in 2006. While that was only a small increase from the previous year, America's prescription drug tab increased by 8.5%, fueled largely by the new Medicare Part D drug benefit.

Health spending as a share of the nation's gross domestic product continues to rise, hitting 16% in 2006.

Total spending on physician and clinical services grew 5.9% to $448 billion, the slowest rate of growth since 1999. Physician pay crawled almost to a halt, largely because of the freeze in Medicare's reimbursement rates in 2006. Private insurers seemed to have followed suit, said Cathy Cowan, an economist at the Centers for Medicare and Medicaid Services. Cowan, a coauthor of an annual analysis of the nation's health spending, spoke at a briefing on the report, which was published in the January/February issue of Health Affairs.

Medicare had the fastest rate of growth since 1981, according to the report. Spending increased 19% in 2006 to $401 billion, driven largely by the prescription drug benefit and the cost of administration for that benefit and for Medicare Advantage, a managed care program.

Medicaid spending dropped for the first time since the program began in 1965. The 0.9% decrease was largely due to Medicaid enrollees who were shifted into Medicare for their prescription drugs.

Overall drug spending grew 8.5% in 2006—a far cry from the double-digit increases seen in the late 1990s, but still an increase from the 5.8% rise in spending in 2005. Half of the 2006 increase was due to greater utilization, not surprising given that about 23 million Medicare beneficiaries took advantage of the new benefit. Prescription prices increased by only a little over 3%, according to an annual analysis by actuaries at the Centers for Medicare and Medicaid Services.

The change in the drug rebate picture also contributed to rising drug costs. Under Medicaid, states received an average 30% rebate from drugmakers. Medicare, however, got only about 5% from manufacturers for the millions of beneficiaries who shifted out of Medicaid.

Medicare spent $41 billion on Part D in 2006, with $35 billion for drug purchases and $6 billion for administration and "net cost of insurance"—that is, the cost of subsidizing premiums for low-income beneficiaries and costs for transferring beneficiaries into private plans. Medicare paid for 18% of all retail drugs, compared with only 2% in 2005.

The largest increase in drug utilization came from beneficiaries using the Part D benefit. But there was also increased drug use due to new indications for existing drugs, growth in several therapeutic classes, and rising use of specialty drugs such as injectable biologics for rheumatoid arthritis and multiple sclerosis, and anemia drugs for oncology. Hypnotics saw the largest rise in use of any drug class.

The authors said the data they had at hand and their analysis did not allow them to determine whether the prescription drug benefit had increased or lowered overall health care spending. "Sooner or later, somebody's going to do a dynamite study and figure this out," said Richard Foster, the chief actuary at CMS.

Mr. Foster told reporters that the study showed that the "overall cost of prescription drugs has changed very little as a result of Part D."

A study by Consumers Union, however, seemed to refute that claim. (See box.)

Drug Prices Up Too: Consumers Union

Government economists have concluded that the Medicare Part D prescription drug benefit did not affect the price of pharmaceuticals in 2006, the program's first full year, but Consumers Union has issued another in a series of studies charging that drug prices are indeed rising.

Each month since December 2005, the consumer advocacy group has tracked the prices of five drugs commonly used by Medicare beneficiaries in a single ZIP code in each of five states—California, New York, Illinois, Florida, and Texas. The data are taken directly from Medicare.gov. According to Consumers Union, the data show that the majority of private insurers have consistently raised prices, sometimes at 2–3 times the rate of inflation.

Medicare beneficiaries might be bearing the brunt of price increases, especially because they usually are liable for a percentage of the drug's price as a copayment. "We're seeing a lot of inflation," said Consumers Union Senior Policy Analyst Bill Vaughan in an interview.

The group also found that prices generally rise the most from December to January—after a beneficiary has locked into a plan for the upcoming year. The average increase for the five drugs as a package (Lipitor, Celebrex, Zoloft, nifedipine ER, and Altace) was $369 from December 2007 to January 2008, according to Consumers Union.

"Most of these Medicare drug plans are increasing costs [at] double or triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors," said Mr. Vaughan. "These continual price hikes are Exhibit A for Congress to give renewed attention to negotiating drug prices on behalf of America's taxpayers and seniors."

WASHINGTON — The nation spent $2 trillion, or $7,000 per person, on health care in 2006. While that was only a small increase from the previous year, America's prescription drug tab increased by 8.5%, fueled largely by the new Medicare Part D drug benefit.

Health spending as a share of the nation's gross domestic product continues to rise, hitting 16% in 2006.

Total spending on physician and clinical services grew 5.9% to $448 billion, the slowest rate of growth since 1999. Physician pay crawled almost to a halt, largely because of the freeze in Medicare's reimbursement rates in 2006. Private insurers seemed to have followed suit, said Cathy Cowan, an economist at the Centers for Medicare and Medicaid Services. Cowan, a coauthor of an annual analysis of the nation's health spending, spoke at a briefing on the report, which was published in the January/February issue of Health Affairs.

Medicare had the fastest rate of growth since 1981, according to the report. Spending increased 19% in 2006 to $401 billion, driven largely by the prescription drug benefit and the cost of administration for that benefit and for Medicare Advantage, a managed care program.

Medicaid spending dropped for the first time since the program began in 1965. The 0.9% decrease was largely due to Medicaid enrollees who were shifted into Medicare for their prescription drugs.

Overall drug spending grew 8.5% in 2006—a far cry from the double-digit increases seen in the late 1990s, but still an increase from the 5.8% rise in spending in 2005. Half of the 2006 increase was due to greater utilization, not surprising given that about 23 million Medicare beneficiaries took advantage of the new benefit. Prescription prices increased by only a little over 3%, according to an annual analysis by actuaries at the Centers for Medicare and Medicaid Services.

The change in the drug rebate picture also contributed to rising drug costs. Under Medicaid, states received an average 30% rebate from drugmakers. Medicare, however, got only about 5% from manufacturers for the millions of beneficiaries who shifted out of Medicaid.

Medicare spent $41 billion on Part D in 2006, with $35 billion for drug purchases and $6 billion for administration and "net cost of insurance"—that is, the cost of subsidizing premiums for low-income beneficiaries and costs for transferring beneficiaries into private plans. Medicare paid for 18% of all retail drugs, compared with only 2% in 2005.

The largest increase in drug utilization came from beneficiaries using the Part D benefit. But there was also increased drug use due to new indications for existing drugs, growth in several therapeutic classes, and rising use of specialty drugs such as injectable biologics for rheumatoid arthritis and multiple sclerosis, and anemia drugs for oncology. Hypnotics saw the largest rise in use of any drug class.

The authors said the data they had at hand and their analysis did not allow them to determine whether the prescription drug benefit had increased or lowered overall health care spending. "Sooner or later, somebody's going to do a dynamite study and figure this out," said Richard Foster, the chief actuary at CMS.

Mr. Foster told reporters that the study showed that the "overall cost of prescription drugs has changed very little as a result of Part D."

A study by Consumers Union, however, seemed to refute that claim. (See box.)

Drug Prices Up Too: Consumers Union

Government economists have concluded that the Medicare Part D prescription drug benefit did not affect the price of pharmaceuticals in 2006, the program's first full year, but Consumers Union has issued another in a series of studies charging that drug prices are indeed rising.

Each month since December 2005, the consumer advocacy group has tracked the prices of five drugs commonly used by Medicare beneficiaries in a single ZIP code in each of five states—California, New York, Illinois, Florida, and Texas. The data are taken directly from Medicare.gov. According to Consumers Union, the data show that the majority of private insurers have consistently raised prices, sometimes at 2–3 times the rate of inflation.

Medicare beneficiaries might be bearing the brunt of price increases, especially because they usually are liable for a percentage of the drug's price as a copayment. "We're seeing a lot of inflation," said Consumers Union Senior Policy Analyst Bill Vaughan in an interview.

The group also found that prices generally rise the most from December to January—after a beneficiary has locked into a plan for the upcoming year. The average increase for the five drugs as a package (Lipitor, Celebrex, Zoloft, nifedipine ER, and Altace) was $369 from December 2007 to January 2008, according to Consumers Union.

"Most of these Medicare drug plans are increasing costs [at] double or triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors," said Mr. Vaughan. "These continual price hikes are Exhibit A for Congress to give renewed attention to negotiating drug prices on behalf of America's taxpayers and seniors."

WASHINGTON — The nation spent $2 trillion, or $7,000 per person, on health care in 2006. While that was only a small increase from the previous year, America's prescription drug tab increased by 8.5%, fueled largely by the new Medicare Part D drug benefit.

Health spending as a share of the nation's gross domestic product continues to rise, hitting 16% in 2006.

Total spending on physician and clinical services grew 5.9% to $448 billion, the slowest rate of growth since 1999. Physician pay crawled almost to a halt, largely because of the freeze in Medicare's reimbursement rates in 2006. Private insurers seemed to have followed suit, said Cathy Cowan, an economist at the Centers for Medicare and Medicaid Services. Cowan, a coauthor of an annual analysis of the nation's health spending, spoke at a briefing on the report, which was published in the January/February issue of Health Affairs.

Medicare had the fastest rate of growth since 1981, according to the report. Spending increased 19% in 2006 to $401 billion, driven largely by the prescription drug benefit and the cost of administration for that benefit and for Medicare Advantage, a managed care program.

Medicaid spending dropped for the first time since the program began in 1965. The 0.9% decrease was largely due to Medicaid enrollees who were shifted into Medicare for their prescription drugs.

Overall drug spending grew 8.5% in 2006—a far cry from the double-digit increases seen in the late 1990s, but still an increase from the 5.8% rise in spending in 2005. Half of the 2006 increase was due to greater utilization, not surprising given that about 23 million Medicare beneficiaries took advantage of the new benefit. Prescription prices increased by only a little over 3%, according to an annual analysis by actuaries at the Centers for Medicare and Medicaid Services.

The change in the drug rebate picture also contributed to rising drug costs. Under Medicaid, states received an average 30% rebate from drugmakers. Medicare, however, got only about 5% from manufacturers for the millions of beneficiaries who shifted out of Medicaid.

Medicare spent $41 billion on Part D in 2006, with $35 billion for drug purchases and $6 billion for administration and "net cost of insurance"—that is, the cost of subsidizing premiums for low-income beneficiaries and costs for transferring beneficiaries into private plans. Medicare paid for 18% of all retail drugs, compared with only 2% in 2005.

The largest increase in drug utilization came from beneficiaries using the Part D benefit. But there was also increased drug use due to new indications for existing drugs, growth in several therapeutic classes, and rising use of specialty drugs such as injectable biologics for rheumatoid arthritis and multiple sclerosis, and anemia drugs for oncology. Hypnotics saw the largest rise in use of any drug class.

The authors said the data they had at hand and their analysis did not allow them to determine whether the prescription drug benefit had increased or lowered overall health care spending. "Sooner or later, somebody's going to do a dynamite study and figure this out," said Richard Foster, the chief actuary at CMS.

Mr. Foster told reporters that the study showed that the "overall cost of prescription drugs has changed very little as a result of Part D."

A study by Consumers Union, however, seemed to refute that claim. (See box.)

Drug Prices Up Too: Consumers Union

Government economists have concluded that the Medicare Part D prescription drug benefit did not affect the price of pharmaceuticals in 2006, the program's first full year, but Consumers Union has issued another in a series of studies charging that drug prices are indeed rising.

Each month since December 2005, the consumer advocacy group has tracked the prices of five drugs commonly used by Medicare beneficiaries in a single ZIP code in each of five states—California, New York, Illinois, Florida, and Texas. The data are taken directly from Medicare.gov. According to Consumers Union, the data show that the majority of private insurers have consistently raised prices, sometimes at 2–3 times the rate of inflation.

Medicare beneficiaries might be bearing the brunt of price increases, especially because they usually are liable for a percentage of the drug's price as a copayment. "We're seeing a lot of inflation," said Consumers Union Senior Policy Analyst Bill Vaughan in an interview.

The group also found that prices generally rise the most from December to January—after a beneficiary has locked into a plan for the upcoming year. The average increase for the five drugs as a package (Lipitor, Celebrex, Zoloft, nifedipine ER, and Altace) was $369 from December 2007 to January 2008, according to Consumers Union.

"Most of these Medicare drug plans are increasing costs [at] double or triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors," said Mr. Vaughan. "These continual price hikes are Exhibit A for Congress to give renewed attention to negotiating drug prices on behalf of America's taxpayers and seniors."

Spa Regulations Coming to Mass.

The Massachusetts Board of Registration in Medicine will issue a report next month outlining potential regulatory and statutory changes, and new policies and guidelines for medical spas, according to a board spokesman. The report will be the culmination of a year's worth of work by a medical spa task force. In 2006, the state legislature directed the board to look into how medical spas are monitored and regulated. Massachusetts may be the first state to have taken a comprehensive look at spas. Other state medical boards are eagerly awaiting the task force report, according to the board spokesman. When it is completed, the report will be posted at

www.massmedboard.org/public/med_spa.shtm

Mesotherapy Chain Closes

Fig., a St. Louis-based chain of spas offering mesotherapy, closed 17 of its 18 facilities in mid-December. Only an independently owned and operated center in Costa Mesa, Calif., remains open. According to the chain, formerly known as Advanced LipoDissolve, they had received an eight-figure influx of capital in September from the Larchmont, N.Y., office of Bessemer Venture Partners. At press time, postings on Fig.'s Web site reported that executives planned to file for bankruptcy and eventually reorganize.

FDA Investigating Tattoo Ink

The Food and Drug Administration is investigating the safety of inks and dyes used in tattooing and permanent makeup. In an article written for consumers and posted on FDA's Web site in December, agency officials said that continuing reports of reactions to ink prompted the launch of a study. The agency's National Center for Toxicological Research now is looking into the chemical composition of inks and how they are metabolized, short- and long-term safety of pigments used in tattoo inks, and how inks might change when the body is exposed to light. Some research has already shown that some pigment migrates to the lymph nodes, according to the FDA. The article can be found at

www.fda.gov/consumer/features/tattoos120607.html

Warning on Bioidentical Hormones

The FDA is warning seven pharmacy operations that their claims regarding bioidentical hormone therapy (HT) products are not supported by medical evidence and are considered false and misleading. The pharmacy operations compound hormone therapy drugs that contain estriol as well as progesterone and estrogen. Compounded drugs are not reviewed by the FDA for safety and effectiveness; in addition, no drug product containing estriol has been approved by the FDA. The agency said the pharmacy operations improperly claim that these drugs are superior to FDA-approved HT drugs and prevent or treat diseases, including Alzheimer's disease, stroke, and cancer. More information is available at

www.fda.gov/cder/pharmcomp/default.htm

Minn. Mercury Ban Goes Into Effect

A Minnesota ban on the use of mercury in over-the-counter pharmaceuticals, cosmetics, toiletries, fragrances, and a host of other household and medical products, including thermometers and barometers, went into effect on Jan. 1. The law, signed last May by Gov. Tim Pawlenty, a Republican, is aimed at reducing mercury exposure. Mercury is often added to cosmetics as a preservative. Retailers who knowingly sell cosmetics that contain mercury are liable for fines of up to $700, and manufacturers could be penalized as much as $10,000 for failing to disclose mercury on any product label.

Tanner Subtypes Identified

Physicians can more effectively target messages about the risks of indoor tanning if they first determine a tanner's behavior pattern, researchers from East Tennessee State University and Pennsylvania State University have found. They identified four tanning subtypes: special event, spontaneous or mood, mixed, and regular year-round tanning. They drew their conclusions from a sample of 168 women randomly selected from a larger study of indoor tanning behavior among female students at East Tennessee State. Participants were asked to assess their tanning frequency during the previous 3, 6, and 12 months, and to project their intentions over the next year. The researchers found statistically significant differences among participants in attitudes, social norms, partner preference, and belief that tanning relieves stress, and on four tanning dependence scales. Event tanners (53% of the sample) tanned the least, and scored lowest on attitudes, social norms, and tanning dependence measures; year-round tanners (12%) scored highest and started earliest. The study was funded by grants from the American Cancer Society and the National Cancer Institute. It was published in the December issue of the Archives of Dermatology.

Scant Number of New Approvals

The FDA approved only 17 new chemical entities (NCEs) in 2007, the lowest number since 2002. This comes on the heels of 2 previous years with only 18 NCE approvals each. NCEs are unique products. Those approved in 2007 included two HIV therapies; four oncology products; two antihypertensives; one antibiotic; and one NME each to treat Parkinson's disease, pulmonary hypertension, impetigo, acromegaly, attention-deficit hyperactivity disorder, and phenylketonuria. An imaging agent and injection to prevent blood volume loss during surgery also were approved, as were a handful of biologics, an influenza vaccine, and an avian flu vaccine.

Spa Regulations Coming to Mass.

The Massachusetts Board of Registration in Medicine will issue a report next month outlining potential regulatory and statutory changes, and new policies and guidelines for medical spas, according to a board spokesman. The report will be the culmination of a year's worth of work by a medical spa task force. In 2006, the state legislature directed the board to look into how medical spas are monitored and regulated. Massachusetts may be the first state to have taken a comprehensive look at spas. Other state medical boards are eagerly awaiting the task force report, according to the board spokesman. When it is completed, the report will be posted at

www.massmedboard.org/public/med_spa.shtm

Mesotherapy Chain Closes

Fig., a St. Louis-based chain of spas offering mesotherapy, closed 17 of its 18 facilities in mid-December. Only an independently owned and operated center in Costa Mesa, Calif., remains open. According to the chain, formerly known as Advanced LipoDissolve, they had received an eight-figure influx of capital in September from the Larchmont, N.Y., office of Bessemer Venture Partners. At press time, postings on Fig.'s Web site reported that executives planned to file for bankruptcy and eventually reorganize.

FDA Investigating Tattoo Ink

The Food and Drug Administration is investigating the safety of inks and dyes used in tattooing and permanent makeup. In an article written for consumers and posted on FDA's Web site in December, agency officials said that continuing reports of reactions to ink prompted the launch of a study. The agency's National Center for Toxicological Research now is looking into the chemical composition of inks and how they are metabolized, short- and long-term safety of pigments used in tattoo inks, and how inks might change when the body is exposed to light. Some research has already shown that some pigment migrates to the lymph nodes, according to the FDA. The article can be found at

www.fda.gov/consumer/features/tattoos120607.html

Warning on Bioidentical Hormones

The FDA is warning seven pharmacy operations that their claims regarding bioidentical hormone therapy (HT) products are not supported by medical evidence and are considered false and misleading. The pharmacy operations compound hormone therapy drugs that contain estriol as well as progesterone and estrogen. Compounded drugs are not reviewed by the FDA for safety and effectiveness; in addition, no drug product containing estriol has been approved by the FDA. The agency said the pharmacy operations improperly claim that these drugs are superior to FDA-approved HT drugs and prevent or treat diseases, including Alzheimer's disease, stroke, and cancer. More information is available at

www.fda.gov/cder/pharmcomp/default.htm

Minn. Mercury Ban Goes Into Effect

A Minnesota ban on the use of mercury in over-the-counter pharmaceuticals, cosmetics, toiletries, fragrances, and a host of other household and medical products, including thermometers and barometers, went into effect on Jan. 1. The law, signed last May by Gov. Tim Pawlenty, a Republican, is aimed at reducing mercury exposure. Mercury is often added to cosmetics as a preservative. Retailers who knowingly sell cosmetics that contain mercury are liable for fines of up to $700, and manufacturers could be penalized as much as $10,000 for failing to disclose mercury on any product label.

Tanner Subtypes Identified

Physicians can more effectively target messages about the risks of indoor tanning if they first determine a tanner's behavior pattern, researchers from East Tennessee State University and Pennsylvania State University have found. They identified four tanning subtypes: special event, spontaneous or mood, mixed, and regular year-round tanning. They drew their conclusions from a sample of 168 women randomly selected from a larger study of indoor tanning behavior among female students at East Tennessee State. Participants were asked to assess their tanning frequency during the previous 3, 6, and 12 months, and to project their intentions over the next year. The researchers found statistically significant differences among participants in attitudes, social norms, partner preference, and belief that tanning relieves stress, and on four tanning dependence scales. Event tanners (53% of the sample) tanned the least, and scored lowest on attitudes, social norms, and tanning dependence measures; year-round tanners (12%) scored highest and started earliest. The study was funded by grants from the American Cancer Society and the National Cancer Institute. It was published in the December issue of the Archives of Dermatology.

Scant Number of New Approvals

The FDA approved only 17 new chemical entities (NCEs) in 2007, the lowest number since 2002. This comes on the heels of 2 previous years with only 18 NCE approvals each. NCEs are unique products. Those approved in 2007 included two HIV therapies; four oncology products; two antihypertensives; one antibiotic; and one NME each to treat Parkinson's disease, pulmonary hypertension, impetigo, acromegaly, attention-deficit hyperactivity disorder, and phenylketonuria. An imaging agent and injection to prevent blood volume loss during surgery also were approved, as were a handful of biologics, an influenza vaccine, and an avian flu vaccine.

Spa Regulations Coming to Mass.

The Massachusetts Board of Registration in Medicine will issue a report next month outlining potential regulatory and statutory changes, and new policies and guidelines for medical spas, according to a board spokesman. The report will be the culmination of a year's worth of work by a medical spa task force. In 2006, the state legislature directed the board to look into how medical spas are monitored and regulated. Massachusetts may be the first state to have taken a comprehensive look at spas. Other state medical boards are eagerly awaiting the task force report, according to the board spokesman. When it is completed, the report will be posted at

www.massmedboard.org/public/med_spa.shtm

Mesotherapy Chain Closes

Fig., a St. Louis-based chain of spas offering mesotherapy, closed 17 of its 18 facilities in mid-December. Only an independently owned and operated center in Costa Mesa, Calif., remains open. According to the chain, formerly known as Advanced LipoDissolve, they had received an eight-figure influx of capital in September from the Larchmont, N.Y., office of Bessemer Venture Partners. At press time, postings on Fig.'s Web site reported that executives planned to file for bankruptcy and eventually reorganize.

FDA Investigating Tattoo Ink

The Food and Drug Administration is investigating the safety of inks and dyes used in tattooing and permanent makeup. In an article written for consumers and posted on FDA's Web site in December, agency officials said that continuing reports of reactions to ink prompted the launch of a study. The agency's National Center for Toxicological Research now is looking into the chemical composition of inks and how they are metabolized, short- and long-term safety of pigments used in tattoo inks, and how inks might change when the body is exposed to light. Some research has already shown that some pigment migrates to the lymph nodes, according to the FDA. The article can be found at

www.fda.gov/consumer/features/tattoos120607.html

Warning on Bioidentical Hormones

The FDA is warning seven pharmacy operations that their claims regarding bioidentical hormone therapy (HT) products are not supported by medical evidence and are considered false and misleading. The pharmacy operations compound hormone therapy drugs that contain estriol as well as progesterone and estrogen. Compounded drugs are not reviewed by the FDA for safety and effectiveness; in addition, no drug product containing estriol has been approved by the FDA. The agency said the pharmacy operations improperly claim that these drugs are superior to FDA-approved HT drugs and prevent or treat diseases, including Alzheimer's disease, stroke, and cancer. More information is available at

www.fda.gov/cder/pharmcomp/default.htm

Minn. Mercury Ban Goes Into Effect

A Minnesota ban on the use of mercury in over-the-counter pharmaceuticals, cosmetics, toiletries, fragrances, and a host of other household and medical products, including thermometers and barometers, went into effect on Jan. 1. The law, signed last May by Gov. Tim Pawlenty, a Republican, is aimed at reducing mercury exposure. Mercury is often added to cosmetics as a preservative. Retailers who knowingly sell cosmetics that contain mercury are liable for fines of up to $700, and manufacturers could be penalized as much as $10,000 for failing to disclose mercury on any product label.

Tanner Subtypes Identified

Physicians can more effectively target messages about the risks of indoor tanning if they first determine a tanner's behavior pattern, researchers from East Tennessee State University and Pennsylvania State University have found. They identified four tanning subtypes: special event, spontaneous or mood, mixed, and regular year-round tanning. They drew their conclusions from a sample of 168 women randomly selected from a larger study of indoor tanning behavior among female students at East Tennessee State. Participants were asked to assess their tanning frequency during the previous 3, 6, and 12 months, and to project their intentions over the next year. The researchers found statistically significant differences among participants in attitudes, social norms, partner preference, and belief that tanning relieves stress, and on four tanning dependence scales. Event tanners (53% of the sample) tanned the least, and scored lowest on attitudes, social norms, and tanning dependence measures; year-round tanners (12%) scored highest and started earliest. The study was funded by grants from the American Cancer Society and the National Cancer Institute. It was published in the December issue of the Archives of Dermatology.

Scant Number of New Approvals

The FDA approved only 17 new chemical entities (NCEs) in 2007, the lowest number since 2002. This comes on the heels of 2 previous years with only 18 NCE approvals each. NCEs are unique products. Those approved in 2007 included two HIV therapies; four oncology products; two antihypertensives; one antibiotic; and one NME each to treat Parkinson's disease, pulmonary hypertension, impetigo, acromegaly, attention-deficit hyperactivity disorder, and phenylketonuria. An imaging agent and injection to prevent blood volume loss during surgery also were approved, as were a handful of biologics, an influenza vaccine, and an avian flu vaccine.

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase Medicare physician fees by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress this month.

The panel believes that physician fees should not be cut, said MedPAC Chairman Glenn M. Hackbarth. "That's a very important message for us to convey to Congress."

Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers. "We try to zero in on the most appropriate update," he said, adding that cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey. In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped slightly to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion. The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use. The reporting should be confidential for 2 years. After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla. and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% "doesn't keep up with our costs." Dr. Castellanos said that physicians would not look happily on the recommended update.

"Quite honestly, it's insulting," he said. "The update is a blunt tool for trying to constrain costs," said Dr. Castellanos.

Dr. Nicholas Wolter, a commissioner who practices at a clinic in Billings, Mont., also said that he was not comfortable with the recommendation. "Unless we start focusing on other tactics, we're not going to get a handle on costs," he said.

Mr. Hackbarth said the panel's recommendation should not be taken to mean that the commission believed that everything was fine with the reimbursement system. But, he added, the problems with Medicare threatened beneficiaries, taxpayers, and even his children's future. Solutions should not be focused only on physicians, said Mr. Hackbarth, adding, "it's way bigger than that."

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase Medicare physician fees by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress this month.

The panel believes that physician fees should not be cut, said MedPAC Chairman Glenn M. Hackbarth. "That's a very important message for us to convey to Congress."

Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers. "We try to zero in on the most appropriate update," he said, adding that cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey. In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped slightly to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion. The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use. The reporting should be confidential for 2 years. After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla. and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% "doesn't keep up with our costs." Dr. Castellanos said that physicians would not look happily on the recommended update.

"Quite honestly, it's insulting," he said. "The update is a blunt tool for trying to constrain costs," said Dr. Castellanos.

Dr. Nicholas Wolter, a commissioner who practices at a clinic in Billings, Mont., also said that he was not comfortable with the recommendation. "Unless we start focusing on other tactics, we're not going to get a handle on costs," he said.

Mr. Hackbarth said the panel's recommendation should not be taken to mean that the commission believed that everything was fine with the reimbursement system. But, he added, the problems with Medicare threatened beneficiaries, taxpayers, and even his children's future. Solutions should not be focused only on physicians, said Mr. Hackbarth, adding, "it's way bigger than that."

WASHINGTON — The Medicare Payment Advisory Commission has voted to recommend that Congress increase Medicare physician fees by 1.1% in 2009.

The recommendation will be included in MedPAC's final report to Congress this month.

The panel believes that physician fees should not be cut, said MedPAC Chairman Glenn M. Hackbarth. "That's a very important message for us to convey to Congress."

Before the vote, Mr. Hackbarth said the commission struggled each year to come up with the right numbers. "We try to zero in on the most appropriate update," he said, adding that cost reports, physicians' access to capital, and beneficiaries' access to physician services all go into that calculation.

MedPAC staff member John Richardson told commissioners that it appears that most physicians continue to accept new Medicare patients, but there has been an increase in beneficiaries who said they had trouble finding a new primary care physician, according to a MedPAC survey. In 2006, 24% said they had trouble; by 2007, 30% of beneficiaries reported difficulty.

Medicare fees also are staying fairly steady as a percentage of private insurance fees, said Mr. Richardson. In 2005, Medicare paid 83% of what private insurers did, and in 2006, that had slipped slightly to 81%.

In December, Congress passed and the President signed a last-minute fix to the 2008 fee schedule, granting a 6-month, 0.5% increase for 2008. The fee increase, which included incentives for rural physicians, will cost about $3.1 billion, Mr. Richardson said.

Under current law, Medicare will cut physician fees by 5.5% in 2009. But when fees are renegotiated in July, the 2009 update could change.

MedPAC recommended that fees be increased in 2009 by the projected change in input prices (2.6%) minus the expected growth in productivity (1.5%), for a 1.1% increase. The cost: about $2 billion. The commission projected that spending would increase by another $8 billion out to 2011.

The commission also urged Congress to set up a system to measure and report physician resource use. The reporting should be confidential for 2 years. After that, the Centers for Medicare and Medicaid Services should establish a new payment system that takes into account both resource use and quality measures.

Dr. Ronald D. Castellanos, a physician in a group practice in Port Charlotte, Fla. and a MedPAC commissioner, said a recommendation for an increase was better than a cut, but that the 1.1% "doesn't keep up with our costs." Dr. Castellanos said that physicians would not look happily on the recommended update.

"Quite honestly, it's insulting," he said. "The update is a blunt tool for trying to constrain costs," said Dr. Castellanos.

Dr. Nicholas Wolter, a commissioner who practices at a clinic in Billings, Mont., also said that he was not comfortable with the recommendation. "Unless we start focusing on other tactics, we're not going to get a handle on costs," he said.

Mr. Hackbarth said the panel's recommendation should not be taken to mean that the commission believed that everything was fine with the reimbursement system. But, he added, the problems with Medicare threatened beneficiaries, taxpayers, and even his children's future. Solutions should not be focused only on physicians, said Mr. Hackbarth, adding, "it's way bigger than that."