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American Academy of Family Physicians
Tuesday Apr 08, 2014

Another patch and more time to prepare for ICD-10

Following up last week's post, the Senate approved and the president signed a House bill that prevents steep cuts to Medicare physician payments from going into effect for one year. The bill (now law) also delays the conversion to ICD-10 diagnostic and procedure codes for at least one year.

The measure calls for a 0.5 percent increase in physician payments through Dec. 31, 2014, and no change from Jan. 1 through March 31, 2015. That means is that it will be another year before you have to worry about a potential cut in the Medicare physician payment rate. It also means that Congress has additional time to pass a permanent repeal of the Sustainable Growth Rate that has led to the current predicament. Such action in advance of the mid-term elections seems unlikely, however, given the current lack of agreement on how to pay for repeal.

On the plus side, the delay in ICD-10 does give physicians more time to prepare for that change, which will now occur on Oct. 1, 2015 (or later). Until then, everyone will continue to use ICD-9 codes. That said, you shouldn't use the delay in implementation as an excuse to delay preparation. Physicians, payers, and other users of ICD-10 should continue to move forward with preparation wherever they are in the process, and AAFP has resources to help its members do just that.

– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians

Monday Dec 23, 2013

A short reprieve from Medicare cuts and a little something extra, too

President Obama is expected to sign into law legislation that would grant physicians a reprieve from drastic cuts in their Medicare payments beginning on Jan. 1. The new law, adopted by the Congress last week, provides a 0.5 percent update to Medicare payments for the first three months of 2014 and avoids a 24 percent cut otherwise required under current law.

That action gives Congress three more months to complete its work on legislation that would repeal the Sustainable Growth Rate (SGR) without further disruption to the Medicare program. Both the Senate Finance Committee and the House Ways and Means Committee (amending a bill produced by the House Energy and Commerce Committee) have overwhelmingly approved similar but not identical bills – the SGR Repeal and Medicare Beneficiary Access Act (S 1871) and the Medicare Patient Access and Quality Improvement Act (HR 2810). The three-month extension of the Medicare physician fee schedule (with a 0.5-percent increase) means that the two committees have until March 31 to work out the differences in the bills.

In the meantime, physicians must make decisions about their Medicare participation status for 2014. Physicians wishing to change their Medicare participation or non-participation status for 2014 are required to do so by Jan. 31, 2014. Participation decisions are effective Jan. 1, 2014, even if made between then and Jan. 31, 2014, and are binding for the entire year. More information on physicians’ Medicare participation options is available on the AAFP web site.

– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians

Wednesday Jan 02, 2013

Medicare's fiscal cliff averted ... for now

They waited until the very last second, but members of Congress on Tuesday approved legislation that preserves Medicare physician payment rates for another year and delays planned budget cuts until March.

In the waning hours of New Year's Day, the U.S. House of Representatives passed House Resolution 8, the American Taxpayer Relief Act, which had previously been approved by the Senate. Under the act, current Medicare physician payment rates (i.e., the conversion factor) are extended through Dec. 31, 2013, thus avoiding the 26.5 percent cut required by the sustainable growth rate (SGR) formula. The act also delays, for two months, implementation of the Budget Control Act's sequestration provision, which could reduce payments by an additional 2 percent.

The $25 billion cost for the SGR patch was offset by an array of provisions. One of those included extending the statute of limitations from three to five years for recoupment of Medicare overpayments.

So, what does this mean for your Medicare payments in 2013? Well, for the next two months at least, you should not see any substantial changes. The actual payment allowance for some services may vary slightly, based on changes in relative value units assigned to those services and other elements of the Medicare physician fee schedule. If Congress fails to further address the sequestration cut, you may see a 2 percent drop in your Medicare allowances in early March. Otherwise, things should be stable through the end of the year. 

The American Academy of Family Physicians and the rest of organized medicine continue to push for a permanent solution to the SGR problem. In the meantime, Congress has provided another of its annual patches to this perennial issue.

– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians

Thursday Feb 23, 2012

Another patch and another cliff

Last week, a U.S. House-Senate Conference Committee reached a 10-month deal that would maintain current physician payment rates through the end of the year. The measure, H.R. 3630 (at the THOMAS website, type "H.R. 3630" into the search field after selecting "Bill Number"), was subsequently approved by both the House and Senate. Yesterday, the President signed the bill into law.

This latest patch to the Medicare physician fee schedule avoids the 27.4 percent Medicare physician payment cut that was otherwise scheduled to occur on March 1 as a result of the sustainable growth rate (SGR) formula. Because H.R. 3630 postpones but does not eliminate the threat posed by the SGR, physicians will face a 32 percent Medicare payment reduction when the payment patch expires at the end of this year, which makes Jan. 1, 2013, the next "cliff" that physicians will face in terms of Medicare payments.

As noted, the law does not solve the underlying problem. It only postpones its resolution and adds to the cost of a permanent solution. The cost of repealing the SGR will climb from $316 billion today to $335 billion in 2013. In the meantime, physicians are left to cope with the ongoing uncertainty and hope that Congress will find the fortitude and funds for a permanent solution before 2013 rolls around.

Friday Dec 17, 2010

A happy new year, indeed!

In my last post ("Good news from Medicare, over time," Dec. 2, 2010), I mentioned that, assuming Congress intervenes again by the end of the year and the conversion factor for 2011 is no less than it is now, there would be good news for family physicians in the 2011 Medicare physician fee schedule. Well, I am happy to report that Congress and the President did intervene last week and approved legislation that extends the current Medicare physician payment rate through the end of 2011. 

Admittedly, no increase in the Medicare conversion factor does not sound like good news; after all, it's not like your expenses are going to remain flat for the next year. However, no increase is better than the 25 percent decrease that would have occurred in the absence of an extension. Further, as I noted in my last post, because of relative value unit changes, family physicians should experience an increase in the Medicare payment allowance for some of the services that they provide most often, not to mention the primary care bonus that Medicare will begin to pay in 2011. 

Congress also voted last week to exempt physicians from the Federal Trade Commission's Red Flags Rule. The rule, which applies to creditors and is in intended to stop identity theft, would have been onerous for the typical medical practice. That burden will now be avoided. 

So, as you prepare to ring in the new year, you may do so with the knowledge that you will not be paid any less by Medicare in 2011 and, in fact, as a family physician, you will probably be paid more. Happy new year!

Thursday Dec 02, 2010

Good news from Medicare, over time

In my last post ("SGR relief:  Let us give thanks, for now," Nov. 19, 2010), I referenced that the U.S. Senate had approved a one-month extension of the current Medicare physician fee schedule conversion factor and that the U.S. House of Representatives was expected to do the same when they returned from their Thanksgiving recess. I am happy to report, as Bob Edsall observed in the "Noteworthy" blog earlier this week, that the U.S. House acted as expected, and the conversion factor will remain at its current level through the end of the year. 

Assuming Congress intervenes again by the end of the year (a big assumption, I grant you) and the conversion factor for 2011 is no less than it is now, there is even more good news for family physicians in the 2011 Medicare physician fee schedule. At the current conversion factor and using the relative value units (RVUs) published in the final rule on the 2011 fee schedule, codes 99213 and 99214 (two of the CPT codes most commonly used by family physicians) will have Medicare allowances in 2011 that are 42 and 35 percent higher, respectively, than they were in 2006. The increase will be even larger for those family physicians that qualify for the Medicare primary care bonus that goes into effect next year. 

How is that possible, especially when the current conversion factor is less than it was in 2006? As you can see in this chart, which details the changes over time, the answer lies in the relative value units (RVUs) that are assigned to these codes. Physician work RVUs for these codes got a significant boost in 2007, as a result of the five-year review of the Medicare physician fee schedule, and they got another boost in 2010, when the Centers for Medicare & Medicaid Services (CMS) decided to quit paying for consultation codes and redistributed the RVUs to other evaluation and management (E/M) codes, like 99213 and 99214. The practice expense RVUs and professional liability insurance RVUs have also gone up, thanks to methodology changes at CMS and the use of more current data.  

Given the trials and tribulations to which the conversion factor has been subjected, it is easy to get discouraged about the state of Medicare payments, but it turns out that the reality is a little better than the perception for some of the codes family physicians use most often.  Admittedly, the gains did not occur overnight, which is why it's easy to overlook them, but they are there.  Or at least they will be, if Congress can continue to spare the conversion factor, like it did this week.   

Friday Nov 19, 2010

SGR relief: Let us give thanks, for now

In my last post ("The 2011 Medicare physician fee schedule is here," Nov. 5, 2010), I noted that the fee schedule conversion factor would drop from its current $36.8729 to $25.5217 in January, unless Congress and the President intervened. Thankfully, the U.S. Senate began the intervention process yesterday.

Specifically, yesterday evening, the Senate approved a one-month extension of the current conversion factor. Unfortunately, they did so after the House had recessed for the Thanksgiving holidays, so the House cannot act on the measure until legislators return. However, the House Majority Leader's Office issued this statement:  "Tonight, the Senate passed a one month extension of the current Medicare physician payment rates. It is my intention to schedule this bill for consideration when the House reconvenes on Nov. 29, so we can send it to the President's desk prior to the Nov. 30 expiration date of current SGR relief."

Thus, it appears the fee schedule conversion factor will not drop before the end of the year. Beyond that, who knows? The cost of a 12-month extension that will include some other Medicare provisions is roughly $19 billion. Where that money might be found in the federal budget is unknown, and Senate Democratic leaders have indicated that none of it should come from repealing portions of the health reform legislation. Even if (and this is a big IF) there are sufficient funds for a 12-month extension, the next issue is the legislative vehicle to make that happen. Should Congress use the Continuing Resolution (which is likely to be only two to three months, but will certainly pass to keep the government operating) or the tax bill (which is likely to be an extension for a year or two of the current tax structure, but which will be the most politically volatile bill)? Absent sufficient funds for a 12-month extension, the question will be how long should the extension be (i.e., how long an extension can be funded)? Ultimately, this may be mostly a political question about whether it is better to force a showdown on health reform sooner or later. 

In the meantime, as you prepare to enjoy your turkey (or other holiday meal of choice) next week, say a little word of thanks for the folks in Washington who have spared the Medicare physician fee schedule for another month. And if you're so inclined, say a little prayer that they will find the money (and the fortitude) to implement a longer-term fix before the end of the year. 

Friday Nov 05, 2010

The 2011 Medicare physician fee schedule is here

This week, the Centers for Medicare and Medicaid Services (CMS) unveiled its final rule on the 2011 Medicare physician fee schedule

An initial review shows positive news with respect to the primary care bonus that is effective in 2011. CMS apparently responded positively to comments from the American Academy of Family Physicians and others to change the primary care incentive payment implementation rules to make it more inclusive. As a result, CMS estimates that, under the new, less restrictive rules, about 80 percent of family physicians will qualify for the bonus. 

On the downside, the final rule with comment period announces a reduction to payment rates for physicians' services in 2011 under the sustainable growth rate (SGR) formula. The Medicare physician fee schedule rates are currently scheduled to be reduced under the SGR system on Dec. 1, 2010, and then again on Jan. 1, 2011 under current law. The total reduction in rates between November and January under the SGR system will be 24.9 percent. That means the conversion factor will drop from its current $36.8729 to $25.5217 in January, unless Congress and the President intervene. Of course, this week's Congressional election results may impact what happens in this regard, so stay tuned. 

The final rule will appear in the Federal Register on Nov. 29, 2010, and CMS will accept comments on certain aspects of it until Jan. 2, 2011.

Friday Jul 16, 2010

Looking ahead to the 2011 Medicare physician fee schedule

While the fate of the 2010 Medicare physician fee schedule is temporarily settled, it is time to look ahead to 2011. 

On July 13, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule on the 2011 Medicare physician fee schedule in the Federal Register. The proposed rule covers a wide array of topics, including changes in Medicare fees, updates to existing Medicare programs (like the Physician Quality Reporting Initiative and e-prescribing incentive payments), and implementation of some provisions of the Patient Protection and Affordable Care Act

The bottom-line, good news in the proposed rule is that CMS estimates family physicians will see a 1 percent increase in their Medicare allowed charges in 2011 as a result of changes proposed in the rule, all other things being equal. That is not much, but it is better than the decreases estimated for many other specialties. Of course, any gains could be washed away if Congress and the President do not act to avert the scheduled cut of 21 percent in the Medicare payment rate that will be effective Dec. 1, 2010, under current law.

As in any proposed federal regulation, "the devil is in the details," and I and other AAFP staff are poring over those details in preparing an AAFP response to the proposed rule.  I'll share more on those details in a future post. 

In the meantime, feel free to peruse the proposed rule yourself and share your comments here.

Thursday Jun 03, 2010

2010 Medicare physician fee schedule: Here we go again!

I feel like a broken record. 

On April 1 (see "2010 Medicare physician fee schedule:  Stop me if you've heard this one before"), I shared with you how the Senate had again failed to pass legislation avoiding a 21 percent cut in the Medicare payment rate to physicians. As a result, the cut was technically effective with dates of service on or after April 1, 2010, but the Centers for Medicare & Medicaid Services (CMS) again instructed its contractors to hold claims for services paid under the fee schedule for the first 10 business days of April to give Congress time to rescind the cut. 

It actually took 15 days. On April 15, Congress passed and the President signed legislation that extended the 2009 Medicare physicians payment rate until May 31, 2010. 

Now May 31 has come and gone, and I know that you will be shocked to learn that Congress again failed to act. Actually, to be fair to the House of Representatives, it was the Senate that again failed to act. The House passed a bill on May 28 that would have increased the payment rate by 2.2 percent for the rest of 2010 plus an additional 1 percent in 2011. The Senate, however, determined that there was insufficient time to consider the bill before their Memorial Day recess and left Washington without action on the bill.

Consequently, the 21 percent cut is technically in effect again for dates of service on or after June 1. And once again, CMS has instructed its Medicare contractors to hold claims for services paid under the fee schedule for the first 10 business days of the month to give Congress time to rescind the cut. 

Congress returns from its recess on June 7. What will happen then is anyone's guess. In the meantime, it's the same tune and a different verse, and it's beginning to sound like the blues to most physicians. 

Tuesday May 18, 2010

CMS giveth and Congress taketh away

In March (see "CMS extends cease fire on referring/ordering edits" on March 17), I reported that the Centers for Medicare & Medicaid Services (CMS) had extended the delay in implementation of new rules that give Medicare the authority to reject claims for services or supplies when the ordering physician or health care professional is not enrolled in the Medicare Provider Enrollment, Chain, and Ownership System, or PECOS. The agency had announced a delay in implementation of the new policy until Jan. 3, 2011. 

Unfortunately, what CMS gave, Congress and the President took away with passage of the Patient Protection and Affordable Care Act (PPACA). Amendments made by PPACA essentially mandate implementation of the new rules effective July 1, 2010. 

Or at least that is CMS's interpretation of the statute. CMS published an interim final rule with comment period in the Federal Register on May 5, 2010. The interim final rule implements several PPACA provisions that impact provider and supplier enrollment, ordering and referring, and documentation requirements.  CMS is accepting comments on the interim final rule through July 6, 2010. 

Related to the referring and ordering issue, CMS states that, effective July 1, 2010, it is requiring Medicare contractors to reject claims for selected items and services that are ordered or referred if the legal name(s) and national provider identifier(s) of the ordering/referring provider(s) are not on the claim or the ordering/referring provider does not have an approved enrollment record in PECOS. Affected items and services include durable medical equipment, prosthetics, orthotics, and supplies; home health items or services; and laboratory, imaging, and specialist services, where applicable. CMS is considering extending the provision to prescribed Part B drugs next year. 

CMS has provided an exception to the requirement that the referring/ordering provider have an approved enrollment record in PECOS in the case of an ordering/referring provider who has opted out of Medicare. Apparently, even CMS thought it was ludicrous to require someone to enroll in Medicare for purposes of ordering and referring when they had already opted out of Medicare for everything else.

What makes this particular provision so maddening is the difficulty so many physicians and others have actually enrolling through PECOS. Not only is it cumbersome, but it can often take months, and even making a simple address change through PECOS can lead to enormous headaches, based on some of the horror stories that I have heard.

For those that are interested, CMS is hosting a national provider and supplier conference call on Wed., May 19, from 3 to 5 p.m. ET. The focus of the call will be the interim final rule noted above. To participate, all you have to do is dial 1-800-603-1774 and reference Conference ID 61448973.  It may not change anything, but at least it's an opportunity to learn more on the subject and make your voice heard in the process.

Wednesday Mar 03, 2010

2010 Medicare physician fee schedule: What next?

When we last left the 2010 Medicare physician fee schedule (see "2010 Medicare physician fee schedule: the saga continues," Jan. 27, 2010), it was headed down the tracks towards a "Bridge Out!!" sign after Feb. 28. For those of you who don't follow this story on a day-to-day basis, here is what's happened in the interim. 

As typically happens in this story, Congress tried to avert calamity by passing a stop-gap bill just before Feb. 28, 2010. Unfortunately, Sen. Jim Bunning (R-KY) decided to play Snidely Whiplash in this particular installment and used Senate procedures to prevent Congressional action in advance of the deadline. Consequently, Feb. 28 came and went without Congressional intervention, and the fee schedule dropped on March 1. 

Seeking to play Dudley Do-Right in our story, the Centers for Medicare and Medicaid Services (CMS) bravely threw the fee schedule a lifeline and instructed its contractors to hold all Medicare claims with dates of services on or after March 1 for 10 business days to give Congress one more chance. On March 2, Congress and the President took advantage of that lifeline and enacted legislation (H.R. 4691) that extends the 2009 Medicare payment rate through the end of March. This effectively postpones any cut in the 2010 Medicare physician fee schedule until Apr. 1, 2010 – April Fools' Day.  (Coincidence or cruel irony? You decide.)

So now, the 2010 Medicare physician fee schedule will float along at the 2009 rate through at least the end of March, at which point it is scheduled to plunge over the falls to a precipitous 21 percent decline. Will CMS once again be called upon to throw the fee schedule a lifeline? Will Congress be able once again to rescue the fee schedule before total disaster strikes? And how many physicians will stick it out (instead of opting out) to see what happens? Stay tuned! 

Wednesday Jan 27, 2010

2010 Medicare physician fee schedule: The saga continues

As you will recall, in our last installment (see "The perils of the 2010 Medicare physician fee schedule," Jan. 13, 2010), the 2010 Medicare physician fee schedule was headed down the tracks towards a "Bridge Out!!" sign after Feb. 28.  That is still the situation as I write this post, but two developments in the interim have made the ride a little more interesting. 

First, on Jan. 19, voters in Massachusetts elected a Republican to fill the seat of the late Senator Edward Kennedy.  That has, apparently, effectively put health care reform on hold, which has implications for the fee schedule, since the postponement of the cut in the 2010 Medicare physician fee schedule was intended to give Congress time to implement a long-term fix as part of health care reform.  According to folks inside the Beltway, there is still a lot of work going on with respect to the physician payment formula, but one has to wonder what impact last week's election results will have in this regard.

The other development of interest is that the Medicare conversion factor is actually higher now than it was in 2009.  According to MLN Matters article MM6796, published by the Centers for Medicare & Medicaid Services, the conversion factor for 2010 is currently $36.0846.  In 2009, it was $36.0666.  Apparently, the increase was due to some technical corrections in some of the relative value units (RVUs) in the fee schedule.  Admittedly, two cents per RVU is not much to get excited about, but it's an interesting development nonetheless. 

So, the wild ride continues with only a month to go before calamity may strike.  What twists and turns may appear between now and then?  Stay tuned!

Wednesday Dec 23, 2009

A familiar tune

The end-of-year holiday season is upon us.  I can always tell it is because of the displays in the stores, the songs on my radio, and the phone calls I receive asking about the status of next year's Medicare physician fee schedule

Each year about this time, I start getting phone calls from anxious physicians and their staff members asking if the Medicare fees really are going down in January or whether Congress will intervene as it has in the past.  This year is no different.  Under current law, the Medicare conversion factor (which converts relative value units (RVUs) to Medicare payment allowances) is scheduled to decrease by approximately 21 percent for services provided on or after Jan. 1, 2010.  That decrease will be partially offset by RVU increases announced for office visits and other evaluation and management services that family physicians frequently perform, but Medicare fees will still decline significantly if the conversion factor goes down. 

For the past several years, Congress has intervened at the last minute (or sometimes after the last minute) to either freeze the conversion factor or increase it slightly (although the increase is always less than the rate of inflation, so physicians still lose).  The expectation and hope is that Congress will do so again this time around.  For instance, as I write this, the U.S. House of Representatives' Rules Committee has produced a Defense appropriations bill that includes, among other things, a provision to extend the current Medicare physician payment rates through the end of February, with the expectation that this extension will give Congress enough time to enact  health reform legislation that includes a longer-term fix to Medicare's Sustainable Growth Rate (SGR) and physician fee schedule issue.  It's probably appropriate that the extension is attached to a Defense appropriations bill, since physicians would likely be up in arms if Medicare rates actually fell 21 percent. 

In the meantime, the fact remains that Medicare fees will drop in January unless Congress intervenes, which it has not completely done yet.  So, what's a physician to do?  Well, the good folks at the Centers for Medicare and Medicaid Services have given you until Jan. 31, 2010 to decide.  That's when the current period for changing your Medicare participation status for 2010 will end.  For more information,  I would encourage you to visit the Medicare participation options web page on the American Academy of Family Physicians' web site

And with that, I'll return to listening to the radio, where I can almost hear the Congressional Tabernacle Choir singing:

God rest ye merry gentlefolk; let nothing you dismay.

We plan to patch the SGR, and not to cut your pay.

Then do it all again next year, lest you should go astray.

So our tidings of comfort to the annoyed, to the annoyed.

So our tidings of comfort to the annoyed!

Thursday Nov 05, 2009

Sunny with a chance of gloom

There is potential good news on the Medicare horizon as far as family physicians are concerned.  However, the silver lining is attached to a big, black cloud that could rain on everyone's parade unless Congress intervenes by the end of the year.

On Friday, Oct. 30, the Centers for Medicare and Medicaid Services (CMS) put the final rule on the 2010 Medicare physician fee schedule on display for review and comment by all interested stakeholders.  CMS plans to publish the final rule in the Federal Register on Nov. 25, 2009.  CMS will accept comments until Dec. 29, 2009.

In the final rule, CMS finalized many of the proposals that it made in its proposed rule earlier this year.  For those of you keeping score at home, that's good news for family physicians.  In fact, in the final rule, CMS estimates that family physicians will experience a 4 percent increase in their Medicare allowed charges in 2010 as a result of the rule, all other things being equal.  That is second only to ophthalmologists and optometrists, who are projected to reap a 5 percent increase, and much better than physicians in many other specialties, who are expected to see a decrease in their 2010 Medicare allowed charges as a result of the rule.

Of course, with Medicare, there's always a catch, and the final rule on the 2010 physician fee schedule is no exception.  Under current law, the Medicare conversion factor, which translates Medicare's relative value units into payment allowances, is scheduled to decrease 21.2 percent on Jan. 1, 2010, which would more than wipe out the potential gains for family medicine noted above.  That means Congress has until Dec. 31, 2009, to intervene, as it has the last several years, to avoid this cut.  Forecasters inside the Beltway are optimistic, but as they say on Wall Street, past performance is no indication of future returns.

So, as we approach the new year, the outlook is sunny, but you might want to keep your umbrella handy, just in case.

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