WASHINGTON – The American Academy of Ophthalmology sees both good news and bad news in the newly released 2006 Physician Fee Schedule, published by the Centers for Medicare and Medicaid Services (CMS) this week. The 4.4 percent across the board decrease in physician fees was not unexpected because of the continued use of the flawed Sustainable Growth Rate (SGR) in determining the conversion factor – reducing it from $37.8975 in 2005 to $36.1770 in 2006. The repeal of the SGR is one of the Academy’s highest policy priorities and it continues to work with AMA and others to demand action by the Administration and Congress to stop the cuts.

The Academy is pleased, however, with CMS’s decision not to move forward with changes to the way it calculates practice expense (PE) as set forth in the proposed 2006 Physician Fee Schedule rule. The PE, costs incurred in the operation of a physician’s practice, represent 45 percent of the physician’s fee. The changes proposed by CMS involved the acceptance of new data from six major specialties and would have cut ophthalmology’s payments by another 4.4 percent, phased in over four years, starting with a 1.1 percent cut Jan. 1, 2006.

In the final 2006 Physician Fee Schedule released this week, CMS announced that it would not go forward with the PE proposal and it will continue to use 2005 PE rates to value all services in 2006. CMS is expected to develop a multi-specialty indirect PE survey as recommended by the Academy and the coalition.

The Academy was instrumental in CMS’s shelving of the PE proposal. When announced by CMS, the Academy responded by building a coalition of other negatively impacted specialties, including Emergency Medicine, the American College of Surgeons, Anesthesiology, Neurosurgery, Orthopedics, Rheumatology, Hand Surgery and Thoracic surgery. The Academy thanks the American Society of Cataract and Refractive Surgery and Nancy McCann for their support of this effort. The Academy arranged a coalition meeting with CMS officials to voice its concerns with the proposal and facilitated a formal letter to CMS that argued strenuously for at least a one-year delay to permit a thorough review of the new data, test the validity of the proposed methodology, and consider other possible options. In addition, Academy efforts with Congress resulted in letters to CMS raising concerns from Congressional health leaders, including Reps. Phil English, R-Pa.., Sherrod Brown, D-Ohio, and Kenney Hulshof, R-Mo.

“The PE refinement that targeted ophthalmology for big cuts – a total of $474 million over four years -- was the key component in the rule that we could affect,” said William Rich III, MD, the Academy’s medical director of health policy. “I am pleased to see that this effort, led by the Academy, was successful.”

The Academy also recognizes other positive changes in which it played a part that are set out in the fee schedule.  Perhaps most gratifying is the expansion of Medicare coverage of glaucoma screening to include Hispanic Americans age 65 and older. CMS also responded to Academy requests to add Visudyne (Verteporfin) and Macugen (Pegaptanib) to the list of Competitive Acquisition Program (CAP) approved drugs. The Academy worked to ensure that ophthalmologists would have the option of participating in and procuring these costly drugs through the CAP program.