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
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.
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.
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.
The 2011 Medicare physician fee schedule is here
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 (
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.
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?
Have you seen your Medicare "raise"?
It's official. The Medicare Physician Fee Schedule is updated with a 2.2 percent increase for services from June 1, 2010, through Nov. 30, 2010. After failing once again to address the flawed SGR methodology that creates these expensive and cumbersome short-term fixes, Congress passed and the President signed this latest legislation on June 24. But have you seen the money?
If not, it should be forthcoming in short order. The Centers for Medicare & Medicaid Services (CMS) responded promptly to the fix with a message to its contractors to stop paying claims with dates of service after June 1 at the 21.3 percent cut enacted on that date and to hold those claims until the new rates were loaded into the payment system and tested. Claims held during this period will be processed as quickly as possible in the order received, according to CMS. (Some members of the AAFP coding discussion list report having already received payments that reflect the increase.)
In addition to watching for claims paid under the updated fee schedule, your staff may be dealing with claims that were previously paid at the reduced rate and reprocessed to pay the difference. These claims may present some challenges as the co-insurance amounts increase along with the amounts paid by Medicare. Some secondary payers may receive the adjusted Medicare payment notices electronically and automatically pay the difference in co-insurance; others will not. Likewise, any co-insurance due from a patient would increase.
So if you have a patient who previously paid their co-insurance at the reduced level, do you have to send out a statement for an $2 or $3? Not necessarily. The Office of the Inspector General has also responded to the change in fee schedules by issuing guidance that indicates they will not penalize physicians who choose not to bill patients for the difference as long as this is under a policy that applies equally to all Medicare patients or offered in response to financial hardship and does not relate to any kind of inducement to receive more services. Bottom line: If it will cost you more in staff time, printing and postage than the amount being billed, you may want to either write-off the amount or hold the patient balance and bill it when additional charges are incurred.
In the meantime, we will be watching Congress for a solution before Nov. 30, but don't hold your breath. This is an election year.
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!