American Academy of Family Physicians
Thursday Jan 17, 2013

Avoiding Medicare cliff still has initial consequences for payment

With the Medicare payment cliff averted for now, Medicare and its contractors are beginning to implement payments for 2013 services. Here is what you can expect, based on information provided by the Centers for Medicare and Medicaid Services (CMS).

First, CMS is revising the 2013 Medicare Physician Fee Schedule (MPFS) to reflect the new law's requirements as well as technical corrections identified since publication of the final rule on the 2013 MPFS in November 2012. Officially, the 2013 conversion factor is $34.0230.

Second, to allow sufficient time to develop, test, and implement the revised MPFS, Medicare contractors were able to hold MPFS claims with January 2013 dates of service for up to 10 business days (i.e., through Jan. 15). CMS expected those claims to be released into processing no later than Jan. 16. The claim hold should have minimal impact on your cash flow, however, because, under current law, clean electronic claims are not paid sooner than 14 calendar days (29 for paper claims) after the date of receipt anyway. Claims with dates of service prior to Jan. 1, 2013, are unaffected.

Medicare contractors will be posting the correct MPFS payment rates on their websites no later than Jan. 23. If you have downloaded or will be downloading the fee schedule from your local Medicare contractor's web site, double-check to ensure that it reflects the correct rates, based on the recent change in the law.

Finally, the 2013 Annual Participation Enrollment Program allowed eligible physicians, practitioners, and suppliers an opportunity to change their Medicare participation status by Dec. 31, 2012. Given the new legislation, CMS is extending the 2013 annual participation enrollment period through Feb. 15, 2013. Therefore, you have until Feb. 15, 2013, to postmark any participation changes (both elections and withdrawals) that you want to make. The effective date for any participation status changes during the extension remains Jan. 1, 2013, and will be binding for the rest of the year.

– 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

Friday Dec 21, 2012

Medicare's impending fiscal cliff for physicians

If the federal government does go over the "fiscal cliff" in a little more than a week, don't expect those overseeing physician reimbursements to pad the fall.

The Centers for Medicare and Medicaid Services (CMS) on Dec. 19 announced in an email and conference call with physicians that Medicare claims filed after the first of the year will be processed as normal, which means likely including a planned 26.5 percent reduction in the Medicare physician services conversion factor.

Physicians are also facing an additional 2 percent cut in the Medicare physician payment rate because of the Budget Control Act's sequestration provision.

Under current law, clean electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. In similar past situations, CMS has taken advantage of that provision to have its contractors hold claims for up to 10 business days before processing them, in order to give Congress more time to act and to avoid processing claims twice when the conversion factor is in flux.

“The negative update of 27 percent under current law for the 2013 Medicare Physician Fee Schedule is scheduled to take effect on January 1, 2013,” CMS wrote in the email. “Given the current progress with the legislation, CMS must take steps to implement the negative update.”

CMS did say that it would notify physicians on or before Jan. 11, 2013, about the status of Congressional action to avert the negative update and next steps. Claims with dates of service on or before Dec. 31, 2012, will be unaffected in any case.

Ongoing efforts to avoid the cliff and override the planned rate reduction have so far failed and won't resume until after Christmas at the earliest.

In the meantime, you are advised to start taking steps to mitigate the disruption and meet your own financial obligations in January, in case the cuts actually take effect. This includes re-assessing your Medicare participation options and the extent to which you can continue to afford to care for Medicare beneficiaries. If you decide to limit your involvement with the Medicare program, notify your Medicare patients promptly, so that they, too, can explore other options to seek health care and medical treatment. Finally, you are encouraged to contact your Congressional representatives about this matter, and the American Academy of Family Physicians has provided a convenient means to do so.

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

Thursday Dec 06, 2012

Rethinking your Medicare participation options?

With just a little more than three weeks left before the wheels could fall off Medicare payments, you may be rethinking your level of involvement with the program.

Congress may step in again this year to avoid the scheduled 26.5 percent cut tied to the Sustainable Growth Rate formula. But if not, here is a brief look at the options open to you and ways to reduce your Medicare exposure, even if you remain a participating physician.

You have three Medicare contractual options. You can sign a participating (PAR) agreement, accepting Medicare's allowed charge as payment in full; elect to be a non-PAR physician, which allows you to take Medicare patients on a case-by-case basis and bill patients for more than the Medicare allowance for unassigned claims; or opt out and become a private contracting physician who bills Medicare-eligible patients directly for your services.

You have until Dec. 31 to change your Medicare participation or non-participation status for 2013. Before making a change in status, you should first determine that you are not bound by any contractual arrangements with hospitals, health plans, or other entities that require you to be a PAR physician.

Even if you choose to continue being a PAR physician, there are ways that you can limit your Medicare exposure. For instance, you can refuse to treat Medicare patients except on an emergency basis. Medicare is a voluntary program, and nothing requires you to treat Medicare patients in your practice if you do not wish to do so. You can also limit your practice to existing Medicare patients only and accept no new Medicare patients. Lastly, you can reduce the number of Medicare patients in your practice.

For more information, see Family Practice Management's previously published articles on opting out of Medicare and preparing for a Medicare fee cut.  

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

Wednesday Aug 08, 2012

Coming attractions: Medicare physician fee schedule

One of my favorite things about going to the movies is watching the "trailers" or "previews" that precede the main feature. I enjoy the glimpses of things to come and the anticipation that they foster.

Last week, the Centers for Medicare & Medicaid Services (CMS) offered a preview of the 2013 Medicare physician fee schedule in the form of a notice of proposed rule making (NPRM) published in the Federal Register. You can download a copy of the NPRM and view related links on the CMS website. The AAFP has provided a summary of the 341-page document.

As usual, the proposed rule for next year's fee schedule is full of interesting payment policy proposals. From a family medicine perspective, the most interesting one is a proposal to create and pay for a code that community physicians may report when they manage the care of a patient who is transitioning from a facility to an ambulatory, outpatient setting (e.g., from the hospital back to the community). CMS recognizes that a lot of expensive re-admissions could be prevented if transitions of care were better managed, and CMS appears willing to pay community physicians, including family physicians, for doing just that. CMS estimates that this proposal alone will increase Medicare allowed charges to family physicians by 5 percent in 2013.

Of course, not everything related to the Medicare physician fee schedule is good news. CMS separately estimates that, under current law, the physician fee schedule conversion factor will decrease 27 percent on Jan. 1, 2013, unless Congress and the President again intervene in the process.

CMS is accepting comments on its proposed rule until Sep. 4, 2012, so if you want to provide any feedback that may help shape the final product, you will need to submit it between now and then. Options for how to submit comments are included in an early section of the NPRM.

CMS plans to publish the final rule on or about Nov. 1, 2012, with implementation effective Jan. 1, 2013. Think of it as "show time" for the 2013 Medicare physician fee schedule. Here's hoping that the final product is more of an uplifting picture than any sort of comedy or horror show.

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. 

Monday Oct 25, 2010

Medicare participation: Why, indeed?

As I write this entry, the "SGR Countdown" on the Family Practice Management (FPM) home page has dropped to less than 40 days. And it reminds me of a question that a family physician asked awhile back: "Why would any physician in his [or her] right mind want to participate in a system such as this [Medicare]?"

Why, indeed? I doubt it's for the money. I understand that Medicare is the best payer in some parts of the country (a scary thought as we head into Halloween!).  However, the fact is that the current Medicare physician fee schedule conversion factor ($36.8729) is less than it was in 2004. 

I also doubt that it's because of the simplicity and ease of interaction with Medicare. As documented in this blog and elsewhere, just getting enrolled in Medicare can be a nightmare, and once you're in, there are the myriad of other rules and regulations with which physicians must comply.

So, why do family physicians participate in Medicare? The most common answer that I've heard is that they do it for their Medicare patients. There is a relationship and obligation there that family physicians are reluctant to break. 

What confuses me about this answer is that the law allows physicians to privately contract with those patients and continue to treat them without being bound by Medicare's rules or low payments. Both FPM and the AAFP web site explain what this option involves and provide sample forms for pursuing the option. It does not seem difficult, and yet, the last that I heard, only about 10,000 of the more than 850,000 physicians in the U.S. had elected to pursue this option. 

In the end, I do not have a good answer to the question, although I still think it's a good question. What do you think?

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 Jan 13, 2010

The perils of the 2010 Medicare physician fee schedule

Like an old-time movie serial, my last post (see "A familiar tune" on Dec. 23, 2009) left the 2010 Medicare physician fee schedule dangling over a precipitous 21% drop and clinging to the hope that Congress and the President would intervene before time ran out on Dec. 31. 

As we resume our story, we find that the fee schedule was, indeed, rescued (at least temporarily) by Congressional and Presidential action.  Specifically, in late December, Congress passed, and the President signed, the Department of Defense Appropriations Act of 2010, which provides for a zero percent update to the 2010 Medicare physician fee schedule for a two month period, Jan. 1, 2010 through Feb. 28, 2010.  That essentially means that the Medicare conversion factor (i.e., the dollar multiplier that translates relative value units, or RVUs, into payment amounts under the Medicare physician fee schedule) will stay at the 2009 level through the first two months of 2010.  Physicians may still see some changes in Medicare payment allowances from 2009 levels due to changes in RVUs, but for many of the services most commonly provided by family physicians, those RVU changes are positive. 

In an interesting sub-plot, the Centers for Medicare and Medicaid Services (CMS) has extended the period during which physicians may change their Medicare participation or non-participation status for 2010 until March 17, 2010.  As always, participation decisions are effective Jan. 1 and binding for the entire year.  For more information, see the Medicare participation options web page on the American Academy of Family Physicians' web site. 

As noted, the reprieve for the 2010 fee schedule is only temporary, and a "Bridge Out!!" sign looms on the horizon as the fee schedule hurtles down the tracks with no brakes.  Will Congress and the President come to the rescue again?  Will the 2010 fee schedule and physicians finally find lasting happiness?  Or will it all come to a crashing 21 percent decline on March 1? 

While we await the answers to these and other exciting questions, you may want to keep your options open as it relates to Medicare in 2010, especially since CMS has given you until March 17 to make a final decision on your Medicare participation status.  Regardless of your current status, your options in the meantime are to either hold your Medicare claims (if your cash flow allows that) until the dust settles or to continue submitting them as you always do. 

If you continue to file Medicare claims and later change your participation status, please be aware that there may be some consequences to the status change since it will be retroactive to Jan. 1, 2010.  Thus, if you are currently "participating" and change to "non-participating," you will likely have to make a refund to Medicare, since participating physicians have a higher Medicare allowance than non-participating physicians.  On the other hand, you will then be able to bill Medicare beneficiaries up to the Medicare limiting charge for unassigned claims, which will theoretically allow you to collect more for your services than you could have as a participating physician. 

On the flip-side, if you are currently non-participating and choose to become participating, you may be able resubmit your claims and get paid at the higher participating rate.  However, you will also likely have to refund to beneficiaries any amounts previously collected for 2010 services that exceed the participating physicians' allowed amounts. 

Thus ends this chapter in our story.  Stay tuned for the next exciting installment of "The Perils of the 2010 Medicare Physician Fee Schedule!" 

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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