Medicare RVU proposals: Two out of three ain't bad
On June 6, the Centers for Medicare & Medicaid Services (CMS) published a proposed notice in the Federal Register, in which it laid out its initial decisions related to the Five-Year Review of work relative value units (RVUs) under the Medicare physician fee schedule. Family physicians looking for good news in the proposed notice should find some, except when it comes the valuation of observation care in a hospital.
First, the good news. CMS stated that it intends to increase the work RVUs for nursing facility discharge services, represented by codes 99315 and 99316. The proposed new values will put these codes on par with the corresponding codes for hospital discharge day services (99238 and 99239).
CMS also proposed to publish increased values for preventive medicine services codes (99381-99397). Although Medicare does not cover these services, many other payers do. The proposed RVUs represent an increase over the current RVUs in each case, reflecting a more appropriate recognition of the value of preventive medicine services. Publication of the new values will provide a basis for other payers to use those values in setting their own fee schedules.
Now for the bad news. In the proposed notice, CMS indicated its intent to maintain the current work RVUs for initial observation care (codes 99218-99220) and to decrease the work RVUs for codes 99234-99236, which include observation admission and discharge on the same date.
CMS’s rationale, as stated in the proposed notice is that “we [CMS] do not believe the work RVUs of the initial observation care codes (99218, 99219, and 99220) should be equivalent (or close) to the initial hospital care codes (99221, 99222, and 99223).” Instead, CMS believes that “the acuity level of the typical patient receiving outpatient observation services would generally be lower than that of the inpatient level" and that "if the patient’s acuity level is determined to be at the level of the inpatient, the patient should be admitted to the hospital as an inpatient.” The CMS recommended values for 99234-99236 are subsequently affected by CMS’s recommendations for 99218-99220.
CMS’s belief that the acuity level of the typical patient receiving outpatient observation services would generally be lower than that of the inpatient level is an assumption, not a documented statement of fact. In reality, hospital inpatient and outpatient status is often as much a function of payment policy as it is patient acuity. That is, hospitals not infrequently declare a patient’s status as “inpatient” or “outpatient” based on what they calculate will be most financially advantageous (e.g., based on a comparison of what Medicare will pay under the outpatient versus inpatient prospective payment systems), which does not necessarily equate to patient acuity.
CMS will not finalize its proposals until this fall, when it publishes the final rule on the 2012 Medicare physician fee schedule, so CMS may yet change its mind with respect to any or all of the above. Whatever CMS finally decides will be reflected in Medicare's payment for the services in 2012.
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!
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.
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!
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!"
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!