mr NATHAN ELIAS

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

The Physician Payments Sunshine Act (S. 301) introduced by Senator Herb Kohl and Senator Chuck Grassley. This Senate bill would require drug and medical device makers to disclose gifts and payments to doctors, which would be listed online in a publicly accessible database. Marshfield Clinic has internal policies prohibiting acceptance of gifts of any kind that might be intended to affect the judgment and discretion of it physicians, providers and staff. On September. 15, 2009 Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, released a chairmans mark which proposes reforms of the health care system, including major expansions of public health care programs, Medicare reforms, tax breaks for small businesses, requiring larger employers to provide health insurance coverage to their workers or pay into a coverage fund, and requiring all Americans to have health insurance. Marshfield Clinic has specific concerns regarding the Expansion of public programs: Temporarily allowing people age 55-64 to buy in to Medicare until an insurance exchange is up and running. Marshfield Clinic supports Proposals to reform payment to focus on value-based purchasing and also to promote primary care and coordinated delivery. The Mark calls on the Centers for Medicare and Medicaid Services (CMS) to develop a framework to reform and expand the Physician Group Practice Demonstration project in 2010, for its fifth year. Using the results of the project, Baucus also proposes that Medicare develop a new pilot program to test cost and quality opportunities of value-based payment to Accountable Care Organization (ACOs). The Mark also included a Medicare Physician Payment Equity Amendment, "Providing Equitable and Accurate Geographic Adjustments for Medicare Physician Payment." The proposal would direct the Secretary to adjust the practice expense GPCI for 2010 to reflect 3/4 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 3/4 local and national) instead of the full difference under current law. For 2011, the adjustment would reflect 1/2 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 1/2 local and 1/2 national). Relief would apply only to areas with a practice expense GPCI less than 1.0. The amendment would hold-harmless any areas negatively impacted by the adjustment. The proposal would direct the Secretary to analyze current methods of establishing practice expense geographic adjustments under the physician fee schedule (PE GPCI) and evaluate data that fairly and reliably establishes distinctions in the costs of operating a medical practice in the different Medicare payment localities. Such analysis shall include an evaluation of: 1) the feasibility of using actual data or reliable survey data developed by recognized medical organizations such as the American Medical Association on the costs of operating a medical practice, including office rents and non-physician staff wages, in the different Medicare payment localities; 2) the office expense portion of the PE GPCI, including the extent to which types of office expenses are determined in local markets versus national markets, and 3) the weights assigned to each of the categories within the practice expense GPCI. Based on the analysis and evaluation, the Secretary shall, no later than January 1, 2012, make appropriate adjustments to the PE GPCI to ensure accurate geographic adjustments across payment areas. Adjustments made in 2012 would be made without regard to the adjustments made in 2010 and 2011. If the Secretary has not completed the required analysis and evaluation and made appropriate adjustments in the Medicare Physician Fee Schedule rule for 2012 (or subsequent year), the 2011 payment rule under paragraph (1) shall remain in effect. Value Index. On Tuesday, Senator Baucus (D-MT) accepted in his manager's amendment Senator Cantwell's (D-WA) amendment, which includes the healthcare value index. Specifically, the amendment requires a separate payment modifier to the physician payment formula, independent of the Geographic Adjustment Factor. This separate payment modifier will, in a budget neutral manner, pay physicians or groups of physicians differentially based upon the relative quality of care they achieve for Medicare beneficiaries relative to cost. Privacy and Security provisions of HR 1 The American Recovery and Reinvestment Act (HR 1) expands current Federal privacy and security protections for health information. Marshfield clinic has specific concerns about: The bill accomplishes this by: Providing transparency to patients by allowing them to request an audit trail showing all disclosures of their health information- including treatment, payment and operations- made through an electronic record. Electronic health record (EHR) users or maintainers must provide requesting individuals with an accounting of protected health information disclosures made during the three years prior to the request (but only for as much of that three year period during which the EHR was in use). Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Covered entities must comply with requests to restrict the disclosure of an individuals protected health information if the disclosure is to a health plan for purposes of carrying out payment or health care operations and the information pertains solely to a health care item or service paid for out-of-pocket by the individual. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. In using, disclosing or requesting protected health information, covered entities must limit themselves, to the extent practicable, to limited data sets or the minimum necessary information. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Marshfield Clinic supports provisions strengthening enforcement of Federal privacy and security laws by increasing penalties for violations and providing greater resources for enforcement and oversight activities.

The Physician Payments Sunshine Act (S. 301) introduced by Senator Herb Kohl and Senator Chuck Grassley. This Senate bill would require drug and medical device makers to disclose gifts and payments to doctors, which would be listed online in a publicly accessible database. Marshfield Clinic has internal policies prohibiting acceptance of gifts of any kind that might be intended to affect the judgment and discretion of it physicians, providers and staff. On November. 12, 2008 Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, released a white paper on health reform, entitled Call to Action which proposes reforms of the health care system, including major expansions of public health care programs, Medicare reforms, tax breaks for small businesses, requiring larger employers to provide health insurance coverage to their workers or pay into a coverage fund, and requiring all Americans to have health insurance. Marshfield Clinic has specific concerns regarding the Expansion of public programs: Temporarily allowing people age 55-64 to buy in to Medicare until an insurance exchange is up and running. Marshfield Clinic supports Proposals to reform payment to focus on value-based purchasing and also to promote primary care and coordinated delivery. The White Paper calls on the Centers for Medicare and Medicaid Services (CMS) to develop a framework to reform and expand the Physician Group Practice Demonstration project in 2010, for its fifth year. Using the results of the project, Baucus also proposes that Medicare develop a new pilot program to test cost and quality opportunities of value-based payment to Accountable Care Organization (ACOs). Privacy and Security provisions of HR 1 The American Recovery and Reinvestment Act (HR 1) expands current Federal privacy and security protections for health information. Marshfield clinic has specific concerns about: The bill accomplishes this by: Providing transparency to patients by allowing them to request an audit trail showing all disclosures of their health information- including treatment, payment and operations- made through an electronic record. Electronic health record (EHR) users or maintainers must provide requesting individuals with an accounting of protected health information disclosures made during the three years prior to the request (but only for as much of that three year period during which the EHR was in use). Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Covered entities must comply with requests to restrict the disclosure of an individuals protected health information if the disclosure is to a health plan for purposes of carrying out payment or health care operations and the information pertains solely to a health care item or service paid for out-of-pocket by the individual. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. In using, disclosing or requesting protected health information, covered entities must limit themselves, to the extent practicable, to limited data sets or the minimum necessary information. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Marshfield Clinic supports provisions strengthening enforcement of Federal privacy and security laws by increasing penalties for violations and providing greater resources for enforcement and oversight activities.

The Physician Payments Sunshine Act (S. 301) introduced by Senator Herb Kohl and Senator Chuck Grassley. This Senate bill would require drug and medical device makers to disclose gifts and payments to doctors, which would be listed online in a publicly accessible database. Marshfield Clinic has internal policies prohibiting acceptance of gifts of any kind that might be intended to affect the judgment and discretion of it physicians, providers and staff. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 6002 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act On Dec 19, 2009 Sen. Majority leader Reid released a Managers Amendment S. Amendment 2786 to HR 3590 which proposed reforms of the health care system, including major expansions of public health care programs. Marshfield Clinic has specific concerns regarding the Expansion of public programs: Temporarily allowing people age 55-64 to buy in to Medicare until an insurance exchange is up and running. Marshfield Clinic supports Proposals to reform payment to focus on value-based purchasing and also to promote primary care and coordinated delivery. The managers Amendment calls on the Centers for Medicare and Medicaid Services (CMS) to develop a framework to reform and transition the Physician Group Practice Demonstration project into a new program to test cost and quality opportunities of value-based payment to Accountable Care Organization (ACOs). The Mark also included a Medicare Physician Payment Equity Amendment, "Providing Equitable and Accurate Geographic Adjustments for Medicare Physician Payment." The proposal would direct the Secretary to adjust the practice expense GPCI for 2010 to reflect 3/4 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 3/4 local and national) instead of the full difference under current law. For 2011, the adjustment would reflect 1/2 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 1/2 local and 1/2 national). Relief would apply only to areas with a practice expense GPCI less than 1.0. The amendment would hold-harmless any areas negatively impacted by the adjustment. The proposal would direct the Secretary to analyze current methods of establishing practice expense geographic adjustments under the physician fee schedule (PE GPCI) and evaluate data that fairly and reliably establishes distinctions in the costs of operating a medical practice in the different Medicare payment localities. Such analysis shall include an evaluation of: 1) the feasibility of using actual data or reliable survey data developed by recognized medical organizations such as the American Medical Association on the costs of operating a medical practice, including office rents and non-physician staff wages, in the different Medicare payment localities; 2) the office expense portion of the PE GPCI, including the extent to which types of office expenses are determined in local markets versus national markets, and 3) the weights assigned to each of the categories within the practice expense GPCI. Based on the analysis and evaluation, the Secretary shall, no later than January 1, 2012, make appropriate adjustments to the PE GPCI to ensure accurate geographic adjustments across payment areas. Adjustments made in 2012 would be made without regard to the adjustments made in 2010 and 2011. If the Secretary has not completed the required analysis and evaluation and made appropriate adjustments in the Medicare Physician Fee Schedule rule for 2012 (or subsequent year), the 2011 payment rule under paragraph (1) shall remain in effect. Value Index. Specifically, the amendment requires a separate payment modifier to the physician payment formula, independent of the Geographic Adjustment Factor. This separate payment modifier will, in a budget neutral manner, pay physicians or groups of physicians differentially based upon the relative quality of care they achieve for Medicare beneficiaries relative to cost. Privacy and Security provisions of HR 1 The American Recovery and Reinvestment Act (HR 1) expands current Federal privacy and security protections for health information. Marshfield clinic has specific concerns about: The bill accomplishes this by: Providing transparency to patients by allowing them to request an audit trail showing all disclosures of their health information- including treatment, payment and operations- made through an electronic record. Electronic health record (EHR) users or maintainers must provide requesting individuals with an accounting of protected health information disclosures made during the three years prior to the request (but only for as much of that three year period during which the EHR was in use). Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Covered entities must comply with requests to restrict the disclosure of an individuals protected health information if the disclosure is to a health plan for purposes of carrying out payment or health care operations and the information pertains solely to a health care item or service paid for out-of-pocket by the individual. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. In using, disclosing or requesting protected health information, covered entities must limit themselves, to the extent practicable, to limited data sets or the minimum necessary information. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Marshfield Clinic supports provisions strengthening enforcement of Federal privacy and security laws by increasing penalties for violations and providing greater resources for enforcement and oversight activities. Meaningful Use of health information technology On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2009 Budget and Budget Resolution (S Con Res 70 and HR 1105) and related Labor/HHS appropriations legislation regarding funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Labor HHS Appropriations, Appropriations for Community Health Centers, and Increased Funding for Tele-health Activities. Funding for Dental programs in underserved areas. Future funding for Hospital Emergency Department infrastructure in Flambeau, Wisconsin. Provisions of the American Recovery and Reinvestment Act (HR 1) including appropriations for: USDA $1.2 B for essential rural clinics, vehicles equipment, etc; Rural business enterprise grants $150 M; $2.5 B Telemedicine, and distance Learning and Broadband deployment. Labor Workforce programs $3.95 B; $750 M for Training grants for high growth sectors, Priority given to health care sector; Job Corps $250 M. HRSA - $500 M for community health centers; $500M for health professions training; and $200 M for primary care and dentistry programs. NIH research $10 billion expansion $1 B for extramural research facilities; $330 M for instrumentation; $8.2 B/2 yrs for the Office of Director for transfer to Institutes for peer reviewed and competitively ranked research. Comparative effectiveness research at NIH $400 M, AHRQ $300M, and HHS $400M. The funding in the conference agreement shall be used to conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition. HHS ONCHIT $2 B, $300 M of which is for regional efforts for health information exchange; remaining funds can be used for: development of certified electronic health records software if HHS sees that the private market does not meet certain providers needs; training on best practices to integrate health I.T. systems; infrastructure and tools to provide telemedicine; promotion of technologies and best practices that enhance the protection of health information; promotion of the interoperability of clinical data repositories or registries; and improvement and expansion of the use of health I.T. by public health departments. Much of the funds could be distributed to states as planning and implementation grants. HHS/CDC $1 B of which $300 M is for immunization; and $650 M for evidence based clinical and community based prevention and wellness strategies. Transportation Surface transportation $1.5 B; Highway infrastructure $27.5B. HHS HIT Grants to facilitate the purchase, train personnel in use, and secure electronic exchange of health information; Medicare HIT incentive payments up to $44,000 for physicians who are meaningful users of certified EHR technology to improve quality, and who submit quality information (under PQRI - Rules for 2010 forthcoming in July) - with 10% additional in Health professional shortage areas; $11 million for hospitals; Penalties for those physician and providers who have not implemented EMRs begin in 2015. Medicaid incentive payments for non-hospital based physicians, nurse practitioners, nurse midwives, and physician assistants who are meaningful users, but not claiming Medicare incentives equal to 85% of net allowable technology costs not exceeding $63,750. Rural Health Clinics and FQHCs with at least 30% patient volume attributable to Medicaid will be eligible for payments not exceeding $63,750 for the cost of adoption and use of certified HER Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ).

Provisions of the FY 2009 Budget and Budget Resolution (S Con Res 70 and HR 1105) and related Labor/HHS appropriations legislation regarding funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Labor HHS Appropriations, Appropriations for Community Health Centers, and Increased Funding for Tele-health Activities. Funding for Dental programs in underserved areas. Future funding for Hospital Emergency Department infrastructure in Flambeau, Wisconsin. Tracking: Provisions of the American Recovery and Reinvestment Act (HR 1) including appropriations for: USDA $1.2 B for essential rural clinics, vehicles equipment, etc; Rural business enterprise grants $150 M; $2.5 B Telemedicine, and distance Learning and Broadband deployment. Labor Workforce programs $3.95 B; $750 M for Training grants for high growth sectors, Priority given to health care sector; Job Corps $250 M. HRSA - $500 M for community health centers; $500M for health professions training; and $200 M for primary care and dentistry programs. NIH research $10 billion expansion $1 B for extramural research facilities; $330 M for instrumentation; $8.2 B/2 yrs for the Office of Director for transfer to Institutes for peer reviewed and competitively ranked research. Comparative effectiveness research at NIH $400 M, AHRQ $300M, and HHS $400M. The funding in the conference agreement shall be used to conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition. HHS ONCHIT $2 B, $300 M of which is for regional efforts for health information exchange; remaining funds can be used for: development of certified electronic health records software if HHS sees that the private market does not meet certain providers needs; training on best practices to integrate health I.T. systems; infrastructure and tools to provide telemedicine; promotion of technologies and best practices that enhance the protection of health information; promotion of the interoperability of clinical data repositories or registries; and improvement and expansion of the use of health I.T. by public health departments. Much of the funds could be distributed to states as planning and implementation grants. HHS/CDC $1 B of which $300 M is for immunization; and $650 M for evidence based clinical and community based prevention and wellness strategies. Transportation Surface transportation $1.5 B; Highway infrastructure $27.5B. HHS HIT Grants to facilitate the purchase, train personnel in use, and secure electronic exchange of health information; Medicare HIT incentive payments up to $44,000 for physicians who are meaningful users of certified EHR technology to improve quality, and who submit quality information (under PQRI - Rules for 2010 forthcoming in July) . Rural Health Clinics and FQHCs with at least 30% patient volume attributable to Medicaid will be eligible for payments not exceeding $63,750 for the cost of adoption and use of certified HER Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ).

Provisions of the FY 2009 Budget and Budget Resolution (S Con Res 70 and HR 1105) and related Labor/HHS appropriations legislation regarding funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Labor HHS Appropriations, Appropriations for Community Health Centers, and Increased Funding for Tele-health Activities. Funding for Dental programs in underserved areas. Future funding for Hospital Emergency Department infrastructure in Flambeau, Wisconsin. Provisions of the American Recovery and Reinvestment Act (HR 1) including appropriations for: USDA $1.2 B for essential rural clinics, vehicles equipment, etc; Rural business enterprise grants $150 M; $2.5 B Telemedicine, and distance Learning and Broadband deployment. Labor Workforce programs $3.95 B; $750 M for Training grants for high growth sectors, Priority given to health care sector; Job Corps $250 M. HRSA - $500 M for community health centers; $500M for health professions training; and $200 M for primary care and dentistry programs. NIH research $10 billion expansion $1 B for extramural research facilities; $330 M for instrumentation; $8.2 B/2 yrs for the Office of Director for transfer to Institutes for peer reviewed and competitively ranked research. Comparative effectiveness research at NIH $400 M, AHRQ $300M, and HHS $400M. The funding in the conference agreement shall be used to conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition. HHS ONCHIT $2 B, $300 M of which is for regional efforts for health information exchange; remaining funds can be used for: development of certified electronic health records software if HHS sees that the private market does not meet certain providers needs; training on best practices to integrate health I.T. systems; infrastructure and tools to provide telemedicine; promotion of technologies and best practices that enhance the protection of health information; promotion of the interoperability of clinical data repositories or registries; and improvement and expansion of the use of health I.T. by public health departments. Much of the funds could be distributed to states as planning and implementation grants. HHS/CDC $1 B of which $300 M is for immunization; and $650 M for evidence based clinical and community based prevention and wellness strategies. Transportation Surface transportation $1.5 B; Highway infrastructure $27.5B. HHS HIT Grants to facilitate the purchase, train personnel in use, and secure electronic exchange of health information; Medicare HIT incentive payments up to $44,000 for physicians who are meaningful users of certified EHR technology to improve quality, and who submit quality information (under PQRI - Rules for 2010 forthcoming in July) - with 10% additional in Health professional shortage areas; $11 million for hospitals; Penalties for those physician and providers who have not implemented EMRs begin in 2015. Medicaid incentive payments for non-hospital based physicians, nurse practitioners, nurse midwives, and physician assistants who are meaningful users, but not claiming Medicare incentives equal to 85% of net allowable technology costs not exceeding $63,750. Rural Health Clinics and FQHCs with at least 30% patient volume attributable to Medicaid will be eligible for payments not exceeding $63,750 for the cost of adoption and use of certified HER Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ).

Provisions of the FY 2009 Budget and Budget Resolution (S Con Res 70 and HR 1105) and related Labor/HHS appropriations legislation regarding funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Labor HHS Appropriations, Appropriations for Community Health Centers, and Increased Funding for Tele-health Activities. Funding for Dental programs in underserved areas. Future funding for Hospital Emergency Department infrastructure in Flambeau, Wisconsin. Provisions of the American Recovery and Reinvestment Act (HR 1) including appropriations for: USDA $1.2 B for essential rural clinics, vehicles equipment, etc; Rural business enterprise grants $150 M; $2.5 B Telemedicine, and distance Learning and Broadband deployment. Labor Workforce programs $3.95 B; $750 M for Training grants for high growth sectors, Priority given to health care sector; Job Corps $250 M. HRSA - $500 M for community health centers; $500M for health professions training; and $200 M for primary care and dentistry programs. NIH research $10 billion expansion $1 B for extramural research facilities; $330 M for instrumentation; $8.2 B/2 yrs for the Office of Director for transfer to Institutes for peer reviewed and competitively ranked research. Comparative effectiveness research at NIH $400 M, AHRQ $300M, and HHS $400M. The funding in the conference agreement shall be used to conduct or support research to evaluate and compare the clinical outcomes, effectiveness, risk, and benefits of two or more medical treatments and services that address a particular medical condition. HHS ONCHIT $2 B, $300 M of which is for regional efforts for health information exchange; remaining funds can be used for: development of certified electronic health records software if HHS sees that the private market does not meet certain providers needs; training on best practices to integrate health I.T. systems; infrastructure and tools to provide telemedicine; promotion of technologies and best practices that enhance the protection of health information; promotion of the interoperability of clinical data repositories or registries; and improvement and expansion of the use of health I.T. by public health departments. Much of the funds could be distributed to states as planning and implementation grants. HHS/CDC $1 B of which $300 M is for immunization; and $650 M for evidence based clinical and community based prevention and wellness strategies. Transportation Surface transportation $1.5 B; Highway infrastructure $27.5B. HHS HIT Grants to facilitate the purchase, train personnel in use, and secure electronic exchange of health information; Medicare HIT incentive payments up to $44,000 for physicians who are meaningful users of certified EHR technology to improve quality, and who submit quality information (under PQRI - Rules for 2010 forthcoming in July) - with 10% additional in Health professional shortage areas; $11 million for hospitals; Penalties for those physician and providers who have not implemented EMRs begin in 2015. Medicaid incentive payments for non-hospital based physicians, nurse practitioners, nurse midwives, and physician assistants who are meaningful users, but not claiming Medicare incentives equal to 85% of net allowable technology costs not exceeding $63,750. Rural Health Clinics and FQHCs with at least 30% patient volume attributable to Medicaid will be eligible for payments not exceeding $63,750 for the cost of adoption and use of certified HER Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ).

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

The Physician Payments Sunshine Act (S. 301) introduced by Senator Herb Kohl and Senator Chuck Grassley. This Senate bill would require drug and medical device makers to disclose gifts and payments to doctors, which would be listed online in a publicly accessible database. Marshfield Clinic has internal policies prohibiting acceptance of gifts of any kind that might be intended to affect the judgment and discretion of it physicians, providers and staff. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 6002 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act On Dec 19, 2009 Sen. Majority leader Reid released a Managers Amendment S. Amendment 2786 to HR 3590 which proposed reforms of the health care system, including major expansions of public health care programs. Marshfield Clinic has specific concerns regarding the Expansion of public programs: Temporarily allowing people age 55-64 to buy in to Medicare until an insurance exchange is up and running. Marshfield Clinic supports Proposals to reform payment to focus on value-based purchasing and also to promote primary care and coordinated delivery. The managers Amendment calls on the Centers for Medicare and Medicaid Services (CMS) to develop a framework to reform and transition the Physician Group Practice Demonstration project into a new program to test cost and quality opportunities of value-based payment to Accountable Care Organization (ACOs). The Mark also included a Medicare Physician Payment Equity Amendment, "Providing Equitable and Accurate Geographic Adjustments for Medicare Physician Payment." The proposal would direct the Secretary to adjust the practice expense GPCI for 2010 to reflect 3/4 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 3/4 local and national) instead of the full difference under current law. For 2011, the adjustment would reflect 1/2 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 1/2 local and 1/2 national). Relief would apply only to areas with a practice expense GPCI less than 1.0. The amendment would hold-harmless any areas negatively impacted by the adjustment. The proposal would direct the Secretary to analyze current methods of establishing practice expense geographic adjustments under the physician fee schedule (PE GPCI) and evaluate data that fairly and reliably establishes distinctions in the costs of operating a medical practice in the different Medicare payment localities. Such analysis shall include an evaluation of: 1) the feasibility of using actual data or reliable survey data developed by recognized medical organizations such as the American Medical Association on the costs of operating a medical practice, including office rents and non-physician staff wages, in the different Medicare payment localities; 2) the office expense portion of the PE GPCI, including the extent to which types of office expenses are determined in local markets versus national markets, and 3) the weights assigned to each of the categories within the practice expense GPCI. Based on the analysis and evaluation, the Secretary shall, no later than January 1, 2012, make appropriate adjustments to the PE GPCI to ensure accurate geographic adjustments across payment areas. Adjustments made in 2012 would be made without regard to the adjustments made in 2010 and 2011. If the Secretary has not completed the required analysis and evaluation and made appropriate adjustments in the Medicare Physician Fee Schedule rule for 2012 (or subsequent year), the 2011 payment rule under paragraph (1) shall remain in effect. Value Index. Specifically, the amendment requires a separate payment modifier to the physician payment formula, independent of the Geographic Adjustment Factor. This separate payment modifier will, in a budget neutral manner, pay physicians or groups of physicians differentially based upon the relative quality of care they achieve for Medicare beneficiaries relative to cost. Privacy and Security provisions of HR 1 The American Recovery and Reinvestment Act (HR 1) expands current Federal privacy and security protections for health information. Marshfield clinic has specific concerns about: The bill accomplishes this by: Providing transparency to patients by allowing them to request an audit trail showing all disclosures of their health information- including treatment, payment and operations- made through an electronic record. Electronic health record (EHR) users or maintainers must provide requesting individuals with an accounting of protected health information disclosures made during the three years prior to the request (but only for as much of that three year period during which the EHR was in use). Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Covered entities must comply with requests to restrict the disclosure of an individuals protected health information if the disclosure is to a health plan for purposes of carrying out payment or health care operations and the information pertains solely to a health care item or service paid for out-of-pocket by the individual. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. In using, disclosing or requesting protected health information, covered entities must limit themselves, to the extent practicable, to limited data sets or the minimum necessary information. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Marshfield Clinic supports provisions strengthening enforcement of Federal privacy and security laws by increasing penalties for violations and providing greater resources for enforcement and oversight activities. Meaningful Use of health information technology On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems.

The Physician Payments Sunshine Act (S. 301) introduced by Senator Herb Kohl and Senator Chuck Grassley. This Senate bill would require drug and medical device makers to disclose gifts and payments to doctors, which would be listed online in a publicly accessible database. Marshfield Clinic has internal policies prohibiting acceptance of gifts of any kind that might be intended to affect the judgment and discretion of it physicians, providers and staff. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 6002 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act On Dec 19, 2009 Sen. Majority leader Reid released a Managers Amendment S. Amendment 2786 to HR 3590 which proposed reforms of the health care system, including major expansions of public health care programs. Marshfield Clinic has specific concerns regarding the Expansion of public programs: Temporarily allowing people age 55-64 to buy in to Medicare until an insurance exchange is up and running. Marshfield Clinic supports Proposals to reform payment to focus on value-based purchasing and also to promote primary care and coordinated delivery. The managers Amendment calls on the Centers for Medicare and Medicaid Services (CMS) to develop a framework to reform and transition the Physician Group Practice Demonstration project into a new program to test cost and quality opportunities of value-based payment to Accountable Care Organization (ACOs). The Mark also included a Medicare Physician Payment Equity Amendment, "Providing Equitable and Accurate Geographic Adjustments for Medicare Physician Payment." The proposal would direct the Secretary to adjust the practice expense GPCI for 2010 to reflect 3/4 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 3/4 local and national) instead of the full difference under current law. For 2011, the adjustment would reflect 1/2 of the difference between the relative costs of employee wages and rents in each of the different fee schedule areas and the national averages (i.e. a blend of 1/2 local and 1/2 national). Relief would apply only to areas with a practice expense GPCI less than 1.0. The amendment would hold-harmless any areas negatively impacted by the adjustment. The proposal would direct the Secretary to analyze current methods of establishing practice expense geographic adjustments under the physician fee schedule (PE GPCI) and evaluate data that fairly and reliably establishes distinctions in the costs of operating a medical practice in the different Medicare payment localities. Such analysis shall include an evaluation of: 1) the feasibility of using actual data or reliable survey data developed by recognized medical organizations such as the American Medical Association on the costs of operating a medical practice, including office rents and non-physician staff wages, in the different Medicare payment localities; 2) the office expense portion of the PE GPCI, including the extent to which types of office expenses are determined in local markets versus national markets, and 3) the weights assigned to each of the categories within the practice expense GPCI. Based on the analysis and evaluation, the Secretary shall, no later than January 1, 2012, make appropriate adjustments to the PE GPCI to ensure accurate geographic adjustments across payment areas. Adjustments made in 2012 would be made without regard to the adjustments made in 2010 and 2011. If the Secretary has not completed the required analysis and evaluation and made appropriate adjustments in the Medicare Physician Fee Schedule rule for 2012 (or subsequent year), the 2011 payment rule under paragraph (1) shall remain in effect. Value Index. Specifically, the amendment requires a separate payment modifier to the physician payment formula, independent of the Geographic Adjustment Factor. This separate payment modifier will, in a budget neutral manner, pay physicians or groups of physicians differentially based upon the relative quality of care they achieve for Medicare beneficiaries relative to cost. Privacy and Security provisions of HR 1 The American Recovery and Reinvestment Act (HR 1) expands current Federal privacy and security protections for health information. Marshfield clinic has specific concerns about: The bill accomplishes this by: Providing transparency to patients by allowing them to request an audit trail showing all disclosures of their health information- including treatment, payment and operations- made through an electronic record. Electronic health record (EHR) users or maintainers must provide requesting individuals with an accounting of protected health information disclosures made during the three years prior to the request (but only for as much of that three year period during which the EHR was in use). Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Covered entities must comply with requests to restrict the disclosure of an individuals protected health information if the disclosure is to a health plan for purposes of carrying out payment or health care operations and the information pertains solely to a health care item or service paid for out-of-pocket by the individual. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. In using, disclosing or requesting protected health information, covered entities must limit themselves, to the extent practicable, to limited data sets or the minimum necessary information. Marshfield Clinic is concerned about the potential costs and administrative burdens of this provision. Marshfield Clinic supports provisions strengthening enforcement of Federal privacy and security laws by increasing penalties for violations and providing greater resources for enforcement and oversight activities. Meaningful Use of health information technology On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Payment Improvement Act of 2009 H.R.2844 : To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). The following bullet points summarize the objectives of the Marshfield Clinics Health Policy Agenda: promoting payment fairness in Medicare physician and practice expense payments; new formulas for aligning Medicare reimbursement with value; value-based purchasing of health services including bonus payments for high value Medicare Advantage programs; bonus payments for efficient providers; bonus payments for primary care providers; establishment and funding of comparative effectiveness research; financing for the adoption and utilization of health information technology; repeal and reform of the Medicare sustainable growth rate mechanism for updating physician payments; improved reimbursement for the PGP demonstration; expansion of the PGP demonstration methodology into a national accountable care organization program to extend the physician group practice demonstration; and opposition to the establishment of a public option in Health Insurance Exchanges if it were to reimburse providers at Medicare rates. Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. These provisions were included in Sections 1159 and 1160 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3007 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. These provisions were included in Sections 1161 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3201 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. On December 30, 2009, the Centers for Medicare & Medicare Services (CMS) and the ONC released two regulations required by the American Recovery and Reinvestment Act that lay the foundation for meaningful use of certified electronic health record (EHR) technology. A proposed rule issued by CMS outlines proposed provisions governing the EHR incentive programs, including defining the central concept of meaningful use of EHR technology. An interim final regulation (IFR) issued by ONC sets initial standards, implementation specifications, and certification criteria for EHR technology. Marshfield Clinic is vendor of a proprietary electronic medical record, and closely follows federal developments of the HHS office of the national coordinator and the it HIT Policy and Standards Committees to assure meaningful use of electronic medical records and efficient standards for certification and interoperability of unrelated systems. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. These provisions were included in Sections 1157 and 1158 and 1194 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. These provisions were included in Sections 1157 and 1158 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 3102 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. These provisions were included in Sections 1401 of the House Bill, HR 3962, the Affordable Health Care for America Act, and in section 6301 and 6302 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. These provisions were included in Subtitle D of the House Bill, HR 3962, the Affordable Health Care for America Act, and in 6002 of the Senate Bill HR 3590, the Patient Protection and Affordable Care Act. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and as a candidate for appointment to the Medicaid and CHIP Payment and Access Commission (MACPAC) in 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. These provisions were included in Section 1123 of the House Bill, HR 3962, the Affordable Health Care for America Act. Medicare Payment Improvement Act of 2009, HR 2844. To amend title XVIII of the Social Security Act to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Introduced by Rep. Ron Kind and Bruce Braley. Goal: To increase quality of health care in America and decrease cost. The Medicare Payment Improvement Act will fundamentally restructure the Medicare payment system by finally providing an incentive for physicians to provide high quality care. The bill eliminates a geographic adjuster (Work Geographic Practice Cost Index) from Medicare, and replaces it with a figure that measures Value. The value figure measures both quality of care and cost of care. Regions that provide high quality care at low cost will see their Medicare reimbursements increase. Regions that provide low quality care at high cost will see their reimbursements decrease. The current structure of Medicare is known as fee-for-service, and incentivizes the number of services performed. The Braley bill shifts this to value-based care, and incentivizes high quality care and low costs. This proposal will transition our current quantity-based system to a quality-based system. Rep. Braley introduced HR 2201, the Medicare Equity & Accessibility Act. This bill would increase Medicare Part B reimbursement rates in Iowa, by placing a floor on the geographic adjuster (GPCI) that is part of the Part B formula. The bill would have the effect of increasing Part B reimbursements in Iowa and other rural states every time a health care provider sees a patient under Part B. Rep. Braley and others supporting the Medicare Payment Improvement Act including Reps. Kind, Inslee, and McCollum, who were representing a much broader Quality Coalition, who have been pushing for a value index in the Medicare Part B reimbursement equation to measure quality and efficiency of care. This provision includes the following: Quality-Based Care-- Instruct IOM to study how to implement a value index in the Medicare payment system. They will consider geographic differences, access to care, measures of quality, and the role of incentives to impact quality and efficient outcomes of care. After a set two-year timeframe, IOM will make recommendations to the Secretary of HHS on how to specifically change the Medicare payment system to promote high-value care, defined as the efficient delivery of high quality, evidence-based, patient-centered care. The Secretary will then submit a plan of implementation to the Congress, to implement the recommendations of the IOM. Congress will have a finite amount of time to pass a joint resolution of disapproval. If Congress fails to act, or if the recommendations are not expressly disapproved by both Chambers, then the recommendations of the IOM will be implemented, thereby reforming the Medicare payment system to incentivize high-value care. Addressing Geographic Disparity In addition, the deal resulted in substantive action to address geographic disparity in Medicare payments. IOM will do another study, completed within a year after enactment, to determine whether the data and assumptions used to determine the geographic adjusters (Geographic Practice Cost Indexes and Wage Index) are accurate, or based on flawed data. Many believe the factors that determine these indexes are based on flawed data. Upon completion of the study (within one year), the Secretary will take immediate action to adjust the GPCIs and Wage Index to ensure they are based on accurate data. A Medicare Improvement Fund is established, which will consist of $8 billion. From this fund, payments will immediately be made in 2012 and 2013, to ensure the money is there for regions who see an increase in their reimbursement due to the adjusted GPCIs and Wage Index. In 2012 and 2013, a Hold Harmless will exist to ensure that payments do not decrease in any region as a result of these more accurate measurements. The Hold Harmless expires after 2013, to allow budget neutrality for all appropriate shifts that must be made due to correcting the data in the long-term. CMS Physician Group Practice Demonstration Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term, and transition these organizations into Accountable care Organizations. Section 1301 of the House bill HR 3962, the Affordable Health Care for America Act, and Section 3022 of the Senate bill HR 3590, the Patient Protections and Affordable Care Act. Marshfield Clinic Also supported efforts to eliminate the 2% threshold for payments and the 5% limitation on payments in the PGP demonstration.

Provisions of the FY 2010 Budget and Budget Resolution (S Con Res 13 and H C Res 85) regarding health care reform, funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, value based purchasing and geographic fairness in Medicare reimbursement, a freeze in Medicare reimbursement updates for physician services, and comparative effectiveness research at the Agency for Health Research and Quality (AHRQ). Value Index Rewarding Value in the Reimbursement System Congress must introduce a value index into Medicare Parts A and B, to reward physicians and hospitals who provide safe, high quality care with excellent service to Medicare patients at a reasonable cost. The value index can be constructed for many types of payment models, including hospital DRG payments, physician fees, payment updates, and other payment formulas. We recommend that the geographic adjustment of physician work should be eliminated as recommended in legislation introduced by Senator Feingold (S 712) and Senator Grassley (S 318), and replaced with a quality/efficiency based coefficient for physician work as soon as possible. Legislation that we strongly support and would accomplish this objective, has been introduced by Iowa Rep. Bruce Braley and Wisconsin Rep. Ron Kind in the House and by Minnesota Senator Amy Klobuchar and Wisconsin Senators Feingold and Kohl in the Senate. The Medicare Payment Improvement Act (HR 2844, S 1249) seeks to reform the Medicare system to one that rewards the value of care over quantity of procedures, improving quality and lowering the total cost of care over time. The bills outcome-based approach creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. Value Based Purchasing In the traditional fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the effect of economically stimulating growth in the numbers of supply-sensitive services provided by physicians. According to a recent report by the Congressional Budget Office spending in high-spending regions could be reduced without producing worse outcomes, on average, or reductions in the quality of care. (CBO February 2008) Alternatives: Medicare must capture the data on performance measures utilizing available claims-based data, and/or data recoverable through enhanced IT functions, and validate performance improvement. Implement quality/efficiency based payments for physician services as soon as possible. Implement bundled payments for episodes of care. Implement FFS reimbursement for the value added through care management and coordination of services. Improve reimbursement for primary care services. Improve access to care in rural areas. The Medicare Advantage program provides a capitated reimbursement to health plans for all Medicare benefits provided to enrolled beneficiaries. Corresponding mechanisms for rewarding value in the Medicare Advantage program should offer incentives for those plans that demonstrate superior patient care performance. Performance bonuses should be provided for plans that: Achieve predetermined quality performance targets; Adopt health information technology; Meet standards for care coordination; and Provide data on comparative effectiveness. Medicare Advantage Program Marshfield Clinic has concerns about payment projections and policy changes outlined by the Centers for Medicare and Medicaid Services in its Advance Notice of Methodological Changes for Calendar Year 2010 for Medicare Advantage Capitation Rate and Part C and Part D Payment Policies, dated February 20, 2009. Our first concern is that the national per capita growth rate projected in CMSs Advance Notice deviates significantly from the growth rate health plans are experiencing. CMSs projection is based in large part on an unrealistic assumption that Medicare fee-for-service payments for physician services will be cut by 21% this year. However, since 2003, previously scheduled fee reductions have been overridden by Congress. Secondly, an across-the-board 3.74% reduction for risk score coding patterns for all health plans appears quite large. Adequate Funding for CMS The problems facing the Medicare program stem from the nations earliest attempts to make health care services broadly available nationwide without disturbing the economic incentives that were then in place. The federal government developed formulas to evaluate the cost of providing services in different practice settings and in different geographic locations. Those formulas measure resource inputs that have changed over the +40 year life of the program. To ensure affordable access to Medicare services throughout the country Medicare must take steps to refine its measures of the cost of providing services so that Medicares overwhelming financial dominance does not interfere with affordable access in markets that have changed very much since the program began. Congress must ensure that CMS has adequate funding to provide oversight of its many programs, including its measurement of resource and input costs. Information Technology Under current law the capital and operating expenses of installing and maintaining electronic medical records (EMRs) are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS now obsolete measurement of physician practice expenses reflect minimal average expense associated with IT. Alternatives: Congress should provide incentives for EMR adoption, and/or utilization, and Establish standards to facilitate the sharing and exchange of data. CMS must update its mechanism for evaluating the cost of medical practice. Payment Equity for Physician Work Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 06 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. The payment floor provision expired in 06, but has been extended in federal legislation every year since then. Alternatives: The payment floor should be extended indefinitely; Geographic adjustment of work should be eliminated entirely; and replaced with a coefficient of quality and efficiency. Support Senator Feingolds bill, the Rural Medicare Equity Act, S 712. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: Congress should require CMS to administratively revise its measurement of cost of practice to assure the validity and fairness of payments; A payment floor could be established for practice expense. Practice Expense Payment Floor Congress must require the Centers for Medicare & Medicaid Services (CMS) to administratively revise its measurement of the cost of practice to assure the validity and fairness of payment. However, in the interim, a payment floor must be established for practice expense to stem the inequities of the current methodology as proposed by Reps. Braley and Kind in HR 2201, the Medicare Equity and Accessibility Act of 2009. Extreme variation induced by errors in the payment methodology may also be reduced without compromising the relativity of payment by establishing a geographic practice expense index that limits to the difference between relative wages and rents between fee schedule areas and the national average as proposed by Senator Grassley in S 318. Comparative Effectiveness/Evidence Based Medical Informatics Research Evidence-based medicine relies upon the judicious use of current best evidence in making decisions about the care of individual patients. Key to effective implementation of value-based purchasing initiatives is the systematic development of data that links the health of populations to the medical services the population receives. The application of health information technology and genomic information in population- and community-based health care delivery systems coupled with the development of wellness programs has the potential to substantially improve health and personalized health care on a national basis. The Physician Payment Sunshine Act, S. 2029, introduced by Senator Kohl with Senator Grassley in the 110th Congress to create accountability among physicians and the manufacturers of drugs and devices that physicians utilize and prescribe for their patients. This legislation would require manufacturers of pharmaceutical drugs, medical devices, and biologics to disclose the amount of money they give to doctors through payments, gifts, honoraria, travel and other means. The Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Grassley 110th Congress to mitigate current inequities in Medicare reimbursement, improve access to health services in rural and underserved areas, and will begin to close the gap between Medicare reimbursement and the cost of providing services in predominantly rural areas. The legislation establishes a 1.0 floor for physician work and practice expense adjustments. It also revises the work and practice expense formulas to reduce payment differences and more accurately compensate physicians in rural areas for their true practice costs. The bill also extends the five percent incentive payments for primary care and specialty physicians in scarcity areas. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments.

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 70) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Marshfield Clinic nominated Dr. Douglas Reding for an open position on the Medicare Payment Advisory Commission, and sought the endorsement of the Wisconsin delegation, and other Senators and Representatives that serve on the Committees with jurisdiction over the Medicare program. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Support for S.2785, the Save Medicare Access Act of 2008, introduced by Sen. Debbie Stabenow. It would avert the 10.6% cut to physician payments scheduled to take effect in July and the additional cut of 5% or more scheduled in January 09. Payments would continue at their current rate through the remainder of 2008 and then would rise by 1.8% in 2009. The current work GPCI floor and physician scarcity bonus would also be continued through the end of 2009. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. Support for Medicare Rural Health Access Improvement Act, S 2786, introduced by Senator Chuck Grassley especially provisions that would extend the 1.0 work floor through December 31,2009, and would recognize the equality of physician work in all geographic areas and eliminate differing work index values by establishing a national value of 1.0, effective 2010. Also support provisions for physician practice expense that would establish a practice expense floor of 1.0 for 2009 by requiring the Secretary to increase the value of any practice expense geographic index that was below 1.0 to 1.0 for services furnished on or after January 1, 2009 and before January 1, 2010. Subsection (b) would reduce the geographic adjustment for practice expense to 50 percent of the current adjustment for employee wages and rent, effective 2010. Support for Rep. Ron Kinds concept of a not yet introduced MEDICARE EFFICIENCY BILL that would amend the CHAMP Act (H.R. 3162) 304 in whole, by establishing that the 5% bonus payment would be expanded to the top 10% of efficient counties; and a corresponding 5% efficiency penalty for physicians in the bottom 10% of efficient counties. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Also supports efforts to eliminate the 2% threshold for payments and the 5% limitation on payments. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building".

Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. Medicare Provisions in the Tax Relief and Health Care Act of 2006 (HR 6111) Increases payments for physician services and implements a quality reporting system for physician services. Prevents physician payment cuts in 2007 by freezing payment rates for physician services. Provides a 1.5 percent bonus-incentive payment to physicians who report on quality measures in 2007. Establishes a $1.3 billion fund to promote physician payment stability and physician quality initiatives in 2008. Extends the Medicare Modernization Act (MMA) floor on the Medicare work geographic adjustment for physician services. Establishes a floor on the work component of the physician geographic adjustor in 2007 to raise payments in certain rural areas. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building". Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Title VI: Provisions Relating to Part B - Subtitle A: Provisions Relating to Physicians' Services (Sec. 605) Requires the Secretary to review and consider alternative data sources than those currently used to establish the geographic index for the practice expense component under the Medicare physician fee schedule no later than January 1, 2005. Requires the Secretary to select two physician payment localities for such purposes, one to be a rural area and the other one will be a statewide locality that includes both urban and rural areas. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 21) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits.

Among the major changes in the approved legislation would be moving the United States from a first to invent to a first inventor to file- a patent system that exists in other countries. Marshfield Clinic supports adopting a first inventor to file system, but not if the statutory framework creates an environment that is ripe for the misuse and misappropriation of inventions. Clinic support is contingent upon changes to the Patent Reform Act to include of two provisions: no narrowing of the current blanket grace period which encourages researchers to publish their discoveries and achievements; and an oath or sworn statement should be required for all applications. Violations of an oath or sworn statement could be subject to criminal penalties for false or fraudulent statements. The Patent Reform Act of 2007, (HR 1908) introduced by Rep. Howard Berman, (D-CA) contains a number of provisions designed to improve patent quality, deter abusive practices by patent holders, provide meaningful, low-cost alternatives to litigation for challenging patent validity and harmonize U.S. patent law with the patent law of most other countries.

Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. Medicare Provisions in the Tax Relief and Health Care Act of 2006 (HR 6111) Increases payments for physician services and implements a quality reporting system for physician services. Prevents physician payment cuts in 2007 by freezing payment rates for physician services. Provides a 1.5 percent bonus-incentive payment to physicians who report on quality measures in 2007. Establishes a $1.3 billion fund to promote physician payment stability and physician quality initiatives in 2008. Extends the Medicare Modernization Act (MMA) floor on the Medicare work geographic adjustment for physician services. Establishes a floor on the work component of the physician geographic adjustor in 2007 to raise payments in certain rural areas. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building". Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Title VI: Provisions Relating to Part B - Subtitle A: Provisions Relating to Physicians' Services (Sec. 605) Requires the Secretary to review and consider alternative data sources than those currently used to establish the geographic index for the practice expense component under the Medicare physician fee schedule no later than January 1, 2005. Requires the Secretary to select two physician payment localities for such purposes, one to be a rural area and the other one will be a statewide locality that includes both urban and rural areas. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 21) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits.

Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. Medicare Provisions in the Tax Relief and Health Care Act of 2006 (HR 6111) Increases payments for physician services and implements a quality reporting system for physician services. Prevents physician payment cuts in 2007 by freezing payment rates for physician services. Provides a 1.5 percent bonus-incentive payment to physicians who report on quality measures in 2007. Establishes a $1.3 billion fund to promote physician payment stability and physician quality initiatives in 2008. Extends the Medicare Modernization Act (MMA) floor on the Medicare work geographic adjustment for physician services. Establishes a floor on the work component of the physician geographic adjustor in 2007 to raise payments in certain rural areas. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building". Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Title VI: Provisions Relating to Part B - Subtitle A: Provisions Relating to Physicians' Services (Sec. 605) Requires the Secretary to review and consider alternative data sources than those currently used to establish the geographic index for the practice expense component under the Medicare physician fee schedule no later than January 1, 2005. Requires the Secretary to select two physician payment localities for such purposes, one to be a rural area and the other one will be a statewide locality that includes both urban and rural areas. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 21) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits.

Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. Medicare Provisions in the Tax Relief and Health Care Act of 2006 (HR 6111) Increases payments for physician services and implements a quality reporting system for physician services. Prevents physician payment cuts in 2007 by freezing payment rates for physician services. Provides a 1.5 percent bonus-incentive payment to physicians who report on quality measures in 2007. Establishes a $1.3 billion fund to promote physician payment stability and physician quality initiatives in 2008. Extends the Medicare Modernization Act (MMA) floor on the Medicare work geographic adjustment for physician services. Establishes a floor on the work component of the physician geographic adjustor in 2007 to raise payments in certain rural areas. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building". Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Title VI: Provisions Relating to Part B - Subtitle A: Provisions Relating to Physicians' Services (Sec. 605) Requires the Secretary to review and consider alternative data sources than those currently used to establish the geographic index for the practice expense component under the Medicare physician fee schedule no later than January 1, 2005. Requires the Secretary to select two physician payment localities for such purposes, one to be a rural area and the other one will be a statewide locality that includes both urban and rural areas. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 21) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits.

Subtitle D: Additional Demonstrations, Studies, and Other Provisions - (Sec. 649) Directs the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures Deficit Reduction Act (Section 5102) reduced reimbursements for multiple images on contiguous body parts in 2006; the DRA provision created in statute a basis for payment reductions on the imaging of contiguous body parts that CMS implemented through the rulemaking process in 2005; the DRA also requires that payment rates for imaging services delivered in physician offices do not exceed payment rates for identical imaging services delivered in hospital outpatient departments beginning in 2007. Clinic recommends that Congress repeal Section 5102, and direct MedPAC and CMS to conduct a comprehensive study of imaging and the geographic variation in services to determine where growth in the volume of imaging services is appropriate and develop workable solutions to control inappropriate imaging utilization. Medicare Provisions in the Tax Relief and Health Care Act of 2006 (HR 6111) Increases payments for physician services and implements a quality reporting system for physician services. Prevents physician payment cuts in 2007 by freezing payment rates for physician services. Provides a 1.5 percent bonus-incentive payment to physicians who report on quality measures in 2007. Establishes a $1.3 billion fund to promote physician payment stability and physician quality initiatives in 2008. Extends the Medicare Modernization Act (MMA) floor on the Medicare work geographic adjustment for physician services. Establishes a floor on the work component of the physician geographic adjustor in 2007 to raise payments in certain rural areas. CMS Physician Group Practice Demonstration On September 27, 2002 the Centers for Medicare and Medicaid Services published a notice in the Federal Register informing interested parties of an opportunity to submit proposals for participation in the Medicare Physician Group Practice Demonstration (PGP) project to test a hybrid payment methodology that combines Medicare fee-for-service payments with a bonus pool derived from savings achieved by improvements in patient care management. Marshfield Clinic submitted a proposal for this demonstration and was selected by CMS to participate in the demonstration program, effective April 1, 2005. Marshfield Clinic supported CMS determination to extend this program, beyond its initial 3-year term. Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 H.R.1823 Ambulatory Surgical Center Medicare Payment Modernization Act of 2007 introduced by Rep. Wally Herger and Kendrick Meek - Amends title XVIII (Medicare) of the Social Security Act to revise the requirements and the formula for payments for services, including an implantable medical device, furnished to individuals in ambulatory surgical centers. Regulatory clarification of Medicare anti-markup issues, and postponement of the effective date of CMS final rule regarding the applicability of the anti markup provisions with respect to: (1) the technical component of a purchased diagnostic test and (2) any anatomic pathology diagnostic testing services furnished in space that is utilized by a physician group practice as a "centralized building" for purposes of complying with the physician self-referral rules and does not qualify as a "same building". Medicare Prescription Drug, Improvement, and Modernization Act of 2003 - Public Law No: 108-173: Title II: Medicare Advantage -- (Sec. 211) Revises the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Makes change in budget neutrality for blended payments. Increases minimum percentage increase to national growth rate. Marshfield Clinic opposes reductions to Medicare Advantage payments in low payment states. Subtitle D: Additional Reforms - (Sec. 237) Provides that Federally Qualified Health Centers (FQHCs) will receive a wrap-around payment for the reasonable costs of care provided to Medicare managed care patients served at such centers. Raises reimbursements to FQHCs in order that when they are combined with MA payments and cost-sharing payments from beneficiaries they equal 100 percent of the reasonable costs of providing such services. Extends the safe harbor to include any remuneration between a FQHC (or entity controlled by an FQHC) and an MA organization. Title IV: Rural Provisions - Subtitle B: Provisions Relating to Part B Only - (Sec. 412) Directs the Secretary to increase the work geographic index to 1.00 for any locality for which such work geographic index is less than 1.00 for services furnished on or after January 1, 2004, and before January 1, 2007. Since this provision expires at the end of 2006 it must be extended or revised. See Tax Relief and Health Care Act provisions below (Sec. 413) Establishes a new five percent incentive payment program designed to reward both primary care and specialist care physicians for furnishing physicians' services on or after January 1, 2005, and before January 1, 2008 in physician scarcity areas. Directs the Secretary to pay the current law ten percent Health Professional Shortage Area (HPSA) incentive payment for services furnished in full county primary care geographic area HPSAs automatically rather than having the physician identify the health professional shortage area involved. Title VI: Provisions Relating to Part B - Subtitle A: Provisions Relating to Physicians' Services (Sec. 605) Requires the Secretary to review and consider alternative data sources than those currently used to establish the geographic index for the practice expense component under the Medicare physician fee schedule no later than January 1, 2005. Requires the Secretary to select two physician payment localities for such purposes, one to be a rural area and the other one will be a statewide locality that includes both urban and rural areas. Subtitle C: Other Provisions - (Sec. 626) Provides that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update will be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provides that in FY 2005, the last quarter of calendar year 2005, and each of calendar years 2006 through 2009, the ASC update will be zero percent. Provides that subject to recommendations by the General Accounting Office, the Secretary will implement a revised payment system for payment of surgical services furnished in ASCs. Requires the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008. Requires the Comptroller General to conduct a study for a report to Congress that compares the relative costs of procedures furnished in ambulatory surgical centers to the relative costs of procedures furnished in hospital outpatient departments. (Sec. 628) Provides that there will be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008. Information Technology Under current law the capital and operating expenses of installing and maintaining an electronic medical record are assumed to be part of the overhead expense of a medical practice. Since no more than 5 10% of the physician population has installed EMRs, CMS measurement of current physician practice expenses reflect minimal expense associated with IT. Congress should provide incentives for EMR adoption, and should establish standards to facilitate the sharing and exchange of data. S. 1693, the Wired for Health Care Quality Act introduced by Senator Ted Kennedy (D-MA) and Michael Enzi (R-WY) - Amends the Public Health Service Act to establish the Office of the National Coordinator of Health Information Technology to coordinate and oversee programs and activities to develop a nationwide interoperable health information technology infrastructure. Payment Fairness for Practice Costs The formulas by which Medicares payments are calculated are widely variable throughout Medicare localities, and are based upon outdated data assumptions regarding the cost and organization of medical practice. Alternatives: CMS should administratively revise its measurements of the costs of practice to assure the validity and fairness of payments; a payment floor could be established for practice expense; or the present variation (.705 1.501) in practice expense could be channeled into a narrower corridor of adjustment. Payment Equity Before MMA 03, Medicares payments were geographically adjusted based upon erroneous assumptions about the cost of hiring and retaining physicians. Congress established a floor payment mechanism for the physician work component of Medicare payment for 04 07 to assure that physicians in low payment localities were compensated for their work at least at the national average payment amount. This payment floor should be extended indefinitely or geographic adjustment of work should be eliminated entirely. The Rural Medicare Equity Act of 2007 (S 498), introduced by Senator Russ Feingold, Amends title XVIII (Medicare) of the Social Security Act (SSA) to eliminate the geographic physician work adjustment factor from the geographic indices used to adjust payments under the physician fee schedule. Rep. Braley introduced HR 2827, the Medicare Equity and Accessibility Act, along with Rep. Adrian Smith (R-Nebraska). This bill will increase the Medicare Part B reimbursement rates in Iowa and other rural states, by making permanent the 1.0 floor on the Geographic Practice Indexes for Work and Practice Expense. S 2499, the Medicare, Medicaid and SCHIP Extension act of 2007. Supported provisions that prevent the 10.1% cut in Medicare physician payment that was called for in the November 27, 2007 CMS final rule implementing the Medicare physician fee schedule. The bill replaces the 10.1% cut with a 0.5% increase but only through June 30, 2008. S 2499 also extended the 1.0 floor on the geographic adjustor for physician work initially included in the Medicare Modernization Act of 2003 -- also only through June 30. Sustainable Growth Rate Medicares SGR mechanism unfairly links physician payment updates to factors unrelated to patients needs and the cost of providing patient care. Reform proposals include reimbursement updated on a market basket basis, removal of prescription drugs from the calculation of Medicare Part B costs, and rebasing Part B to reflect current rather than cumulative costs. Pay-for Reporting and Performance Currently the prevailing methods of paying for health care in the US neither incent nor reward providing high quality care. The rising costs of care coupled with the increasing awareness of poor quality care have made clear the need for a transformation in the way health care is financed. In the fee-for-service system Medicare currently reimburses for units of service, in a manner that promotes service utilization without regard to quality. This has had the unanticipated, but now recognized effect of economically stimulating growth in the numbers of services provided by physicians. Medicare must implement quality based payments for physician services, and capture the data on performance measures utilizing available claims-based data recoverable through enhanced IT functions. In 2005, the Centers for Medicare and Medicaid Services (CMS) proposed the Physicians Voluntary Reporting Program (PVRP). In late 2006 CMS renamed PVRP the Physicians Quality Reporting Initiative. (PQRI) In the PQRI program CMS calls on physicians to report on evidence-based performance measures selected with input from the National Quality Forum, the Ambulatory Care Quality Alliance, and the National Committee for Quality Assurance, (NCQA). For reporting purposes physicians will utilize provisional G- Codes developed by CMS to indicate whether a patient received a service, did not receive the service, was not a eligible candidate to receive the service, or would not be considered a patient under the care of the physician at the time of the service. Marshfield Clinic has recommended that CMS allow medical groups to electronically report quality measures in an aggregated, periodic, statistically valid basis to PQRI; and re-focus the PQRI on high cost/high volume disease states. Marshfield Clinic supports a request for CMS authorization and funding for a multi-center demonstration project with access to vast data resources across multiple states. This proposed project will connect treatments with outcomes and develop quality metrics that reflect the realities of the care setting and the severity of the patients illness. Provisions of the Presidents FY2008 Budget and related appropriations legislation (S Con Res 21) related to implementation of the Medicare Advantage and Prescription Drug Programs, the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, and prescription drug benefits.

the provision of Medicare and Medicaid services and benefits to patients, incentives to promote electronic health records for all Americans, comparative effectiveness research at the Agency for Health Research and Quality (AHRQ), and prescription drug benefits. Provisions in the President FY 2008 Budget and related appropriations legislation including public health programs in health and wellness and prevention; bioterrorism preparedness -- human, food, animal; human, animal and plant laboratory networks and response networks; Johnes research and eradication; Chronic Wasting Disease eradication and diagnosis; syndromic surveillance; National Institutes of Health research funding; research on childhood agricultural safety and health; waterborne disease research. Labor HHS Appropriations, HR 3043, Appropriations for Community Health Centers, Funds for the State High Risk Pool Grants, and Increased Funding for Tele-health Activities. Centers for Disease Control funding to prevent underage drinking. Funding for Dental programs in underserved areas. Provisions of the Presidents FY 2008 Budget and Budget Resolution (S Con Res 21) related Labor/HHS appropriations legislation (HR 3043) related to funding for the Centers for Medicare and Medicaid Services (CMS) for implementation of the Medicare program and Medicare Advantage Programs,