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Physicians Could Take Hard Hit Under Proposed MPFS Rule

July 28, 2009:

Under the recently released proposed rule for the Medicare physician fee schedule, physicians could see a whopping 21.5 percent decrease in payments for 2010, with a conversion factor of $28.3208.

The payment decrease is a result of the sustainable growth rate update that is used to compute physician payment. This formula has resulted in negative updates every year since 2002; however, Congress has taken a series of legislative steps to prevent the reductions. The SGR is computed using “physician services” to determine growth. In the past, the Centers for Medicare and Medicaid Services (CMS) has included prescription drugs as part of a physician service. Historically, prescription drug costs have increased dramatically more than the costs for other physician services. CMS proposes to remove physician-administered drugs from the definition of “physicians’ services” in section 1848(f)(4)(A) of the Social Security Act for purposes of computing the SGR and levels of allowed expenditures and actual expenditures in all future years and, in fact, to remove it retrospectively to the 1996-1997 base year. The negative 21.5 percent update will not change for 2010. However, this will reduce the past discrepancies between actual and target expenditures and should result in a fewer years in which physicians are expected to experience a negative update.

Another large scale change is the proposal by CMS to exclude consultation codes (99241-99255) from Medicare coverage. The only exception would be consultations provided in the telehealth setting. The agency states that there is confusion regarding the definition of a consult between the American Medical Association and CMS and that an Office of Inspector General audit determined that approximately 75 percent of consultation codes were paid erroneously, resulting in $1.1 billion in overpayments. Consultation codes are typically billed by specialists and are paid at a higher rate than are equivalent evaluation and management (E/M) services.

The agency indicates that it will instruct providers to use existing E/M codes instead and will create new G codes to pay for telehealth consultations. For inpatient consultations, CMS proposes to develop a modifier that would identify the admitting physician of record. The savings from the excluded consultations would be redistributed amongst the other E/M services.

The proposed rule also discusses quality issues. CMS is proposing to increase the number of quality measures, increase the number of measure groups, and simplify reporting by increasing the number of reporting options.

CMS is proposing to increase the payment rates for the initial preventive physical exam (IPPE), also called the “Welcome to Medicare” visit, to be more in line with payment rates for higher complexity services. The IPPE benefit was mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to pay for an initial assessment of key elements of a beneficiary’s health status within six months of the beneficiary’s enrollment in Medicare Part B. Subsequently, Congress extended the time period for the IPPE benefit to within one year of the beneficiary’s enrollment in Part B.

In the proposed rule, CMS also discusses how it plans to address concerns that the Medicare Payment Advisory Commission (MedPAC) and the Government Accountability Office (GAO) have regarding the rapid growth in high-cost imaging services. According to the proposal, CMS would first reduce payment for services that require the use of expensive equipment and redistribute the resulting savings to increase payments for other services, including primary care services.

CMS is also proposing to implement a requirement in the Medicare Improvements for Patients and Providers Act of 2008 that requires that the suppliers of the technical component of advanced imaging services be accredited beginning January 1, 2012, by designating accrediting organizations (AOs). According to the GAO, spending on advanced imaging services, such as computed tomography (CT), magnetic resonance imaging (MRI), and positron emission tomography (PET), is growing almost twice as fast as spending on other types of imaging services and is a significant contributor to the rapid growth in health care spending in recent years, but there is little administrative oversight to ensure the quality of care.

The proposed rule would also implement provisions in MIPPA that added new Medicare benefit categories for cardiac and pulmonary rehabilitation services, and for chronic kidney disease (CKD) education, beginning January 1, 2010. The proposed rule outlines what these programs would entail, how they would be paid under the MPFS, and the criteria for covering these services.

The proposed rule contains a number of provisions to promote improvement in quality of care and patient outcomes through revisions to the Electronic Prescribing Incentive Program (e-Prescribing Program) and the Physician Quality Reporting Initiative (PQRI). Eligible professionals or group practices that meet the requirements of each program in calendar year 2010 will be eligible for incentive payments for each program equal to 2.0 percent of their total estimated allowed charges for the reporting periods. CMS is proposing to simplify the reporting requirements for the electronic prescribing measure and to provide eligible professionals with more reporting options. CMS is also proposing a new process for group practices to be considered successful electronic prescribers.

In addition, CMS is proposing to add more measures and measure groups for eligible professionals to report under the PQRI, to provide a mechanism for participants to submit quality measure data from a qualified electronic health record, and to create a process for group practices to use for reporting the quality measures.

CMS will accept comments on the proposed rule until August 31 and will respond to all comments in a final rule to be issued by November 1, 2009. Unless otherwise specified, the new payment rates and policies will apply to services furnished to Medicare beneficiaries on or after January 1, 2010.

It should also be noted that while no changes were proposed in this rule and none will be made through additional rulemaking subject to public comment, CMS does indicate that it plans to analyze codes reported together more than 75 percent of the time, excluding E/M codes, to determine if it would be appropriate to either make a multiple procedure payment reduction like that applied to surgical services or to bundle the services together and make only a single payment.

Deborah C. Hall
Clinical/Technical Editor


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