Health Care Reform

It seems that every day, I hear news reports about some new legislation that either the House of Representatives or the Senate is developing, or considering, or discussing. At this point, most reports have focused on legislative vehicles being developed by one or another committee. Before any of these proposals can become law, they need to be considered and voted upon by the full houses of Congress. When the House and Senate versions of legislation differ in content, as is not uncommon, they must then go through the “reconciliation” process in order to turn the different House and Senate proposals into a single uniform bill. This reconciled bill must then be considered and voted upon by the House and Senate, and if passed, sent to the President for his signature. In the past, some legislation passed by Congress has been vetoed subsequently by the President (either because the bill sent for signature did not include important elements, or because it did include details that the President found objectionable). In such cases, the legislative process begins all over again. From my vantage point in the Pacific Northwest, it seems to me that in general, things seem to move either very slowly or very quickly in the “other Washington”. As I write this Editor’s Page in early December 2009, it is difficult for me to guess what changes in Health Care legislation or regulation may transpire between now and early 2010. If I were able to predict what may come of Health Care Reform in the next months, I would already have won the lottery and retired to that seaside villa in the South of France!

Regulatory Issues

While the legislative process has received many of the headlines, what goes on in the background—the regulatory process— is of tremendous importance. Readers need to understand that the regulatory process is very complicated— I suspect that most doctors, patients, and the general public have little understanding of the complexities, and I sometimes wonder how easy it is for our elected representatives to digest the details. In addition, the regulatory process is driven in general by existing laws; it must— and will— continue until those statutes are changed. In the case of reimbursement for medical services, the situation is made more cumbersome by the reality that in the United States, many different “reimbursement systems” are in play. Citizens who are fortunate enough to have health care insurance may be “covered” either by the government or by a variety of private health insurance companies. The reimbursement rules are not uniform across all payers, so any discussion that follows is of necessity oversimplified.

In spite of the diversity of reimbursement systems, it seems to me that a few consistent points can be made. First, no reimbursement system is able to sustain ongoing losses. Private insurance companies are businesses, and are expected to be profitable. Federal systems also must adjust to the balance of expenses and income. If their losses exceed their resources, then they are obliged to make changes in their approach— by reducing the amount that they pay for services, or by adjusting the rules for circumstances under which they will pay anything, or by raising premiums collected from those for whom they provide coverage (often termed “beneficiaries”). Some combination of these approaches is often applied.

Second, other reimbursement systems often seem to look to Medicare policy for guidance and precedent. For this reason, being somewhat familiar with how Medicare deals with reimbursement for medical services is at least a good starting point. Medicare reimbursement is not a single “system”; instead, the basis for and details of reimbursement depend on the site of service. From my perspective, three different systems need to be considered. Before doing so, however, let’s recognize that for regulatory purposes, echocardiography service can be described in terms of two major elements: the “technical component” and the “professional component”. The “technical component” (TC) refers to the supplies, equipment, and personnel costs of providing a given service. For a transthoracic echo (TTE), the TC would include the sonographer’s salary for the time needed to perform a “typical” procedure, as well as the cost of the ultrasound instrument (calculated from the acquisition cost and taking into account the number of years of use that can be expected, the time needed to perform the “typical” study, equipment depreciation, and other factors), supplies (such as ECG electrodes, gel, gloves, and other disposable items), and related equipment (including video tape recorders or digital image management systems). The “professional component” (PC) refers to the reimbursement provided to the physician for his or her services – in the case of TTE, this reflects the time needed to interpret the “typical” study, including preparation of the report of study findings and interaction with the requesting provider. In coding terms, the modifier “-26” is often used as a synonym for the PC.

Regulatory Issues

While the legislative process has received many of the headlines, what goes on in the background—the regulatory process— is of tremendous importance. Readers need to understand that the regulatory process is very complicated— I suspect that most doctors, patients, and the general public have little understanding of the complexities, and I sometimes wonder how easy it is for our elected representatives to digest the details. In addition, the regulatory process is driven in general by existing laws; it must— and will— continue until those statutes are changed. In the case of reimbursement for medical services, the situation is made more cumbersome by the reality that in the United States, many different “reimbursement systems” are in play. Citizens who are fortunate enough to have health care insurance may be “covered” either by the government or by a variety of private health insurance companies. The reimbursement rules are not uniform across all payers, so any discussion that follows is of necessity oversimplified.

In spite of the diversity of reimbursement systems, it seems to me that a few consistent points can be made. First, no reimbursement system is able to sustain ongoing losses. Private insurance companies are businesses, and are expected to be profitable. Federal systems also must adjust to the balance of expenses and income. If their losses exceed their resources, then they are obliged to make changes in their approach— by reducing the amount that they pay for services, or by adjusting the rules for circumstances under which they will pay anything, or by raising premiums collected from those for whom they provide coverage (often termed “beneficiaries”). Some combination of these approaches is often applied.

Second, other reimbursement systems often seem to look to Medicare policy for guidance and precedent. For this reason, being somewhat familiar with how Medicare deals with reimbursement for medical services is at least a good starting point. Medicare reimbursement is not a single “system”; instead, the basis for and details of reimbursement depend on the site of service. From my perspective, three different systems need to be considered. Before doing so, however, let’s recognize that for regulatory purposes, echocardiography service can be described in terms of two major elements: the “technical component” and the “professional component”. The “technical component” (TC) refers to the supplies, equipment, and personnel costs of providing a given service. For a transthoracic echo (TTE), the TC would include the sonographer’s salary for the time needed to perform a “typical” procedure, as well as the cost of the ultrasound instrument (calculated from the acquisition cost and taking into account the number of years of use that can be expected, the time needed to perform the “typical” study, equipment depreciation, and other factors), supplies (such as ECG electrodes, gel, gloves, and other disposable items), and related equipment (including video tape recorders or digital image management systems). The “professional component” (PC) refers to the reimbursement provided to the physician for his or her services – in the case of TTE, this reflects the time needed to interpret the “typical” study, including preparation of the report of study findings and interaction with the requesting provider. In coding terms, the modifier “-26” is often used as a synonym for the PC.