Medicare Physician Payment Update
Legislation
Legislative:
The AAMC continues to work with the American Medical Association
(AMA) and other physician groups to advocate for the repeal of the
problematic sustainable growth rate (SGR) currently used to calculate
Medicare physician payments. Without Congressional action, physicians
face a 21 percent cut in Medicare payments effective January 1,
2010.
Health Care Reform:
The three House Committees (Energy and Commerce, Ways and Means,
and Education and Labor) with jurisdiction over health care reform
legislation, completed marking up amended versions of “America’s
Affordable Health Choices Act of 2009” (H.R.
3200) before the August Congressional recess. Differences in
the three bills will need to be reconciled before they are combined
and introduced on the House floor. All three versions include language
to avert the 21 percent cut in Medicare physician payments. Specifically,
the House bills establish a one-year inflationary payment update
in CY 2010 (based on the Medicare Economic Index), and implement
in CY 2011 newly rebased target growth rates for two distinct “service
categories”: evaluation and management (E&M)/Medicare preventative
services; and all other services. The annual target growth rates
for the first and second service categories are set at 2 percent
and 1 percent, respectively. The Congressional Budget Office (CBO)
estimates the fix would cost $228.5 billion over the 2010-2019 period.
The AAMC submitted July 3 comments
while the committees drafted the SGR proposal. The letter asks Congress
to repeal the sustainable growth rate (SGR) formula used to calculate
Medicare physician payments.
In conjuction with the reform language, the House July 22 approved
legislation (H.R.
2920) that excludes the cost of repealing Medicare’s SGR
formula from “pay-go” requirements. In this context, the
House would not have to find offsets for the cost of their physician
fix legislation. The status of this legislation in the Senate is
uncertain. For more information, see page 44 of the AAMC
Legislative and Regulatory Update.
At press time, the Senate Finance Committee had not yet introduced
its health care reform package. The Finance committee package is
expected to include proposals from a series of three options papers
released earlier in the year. In response to the three options papers,
the AAMC submitted a series of comments
which included strong support for repealing the SGR and implementing
a new update methodology that links physician updates to an inflationary
index (e.g., the Medicare Economic Index). The Finance 26 Committee
option papers included one proposal to establish a 1 percent update
in Calendar Years (CYs) 2010 and 2011 and a 0 percent update in
CY 2012. Another option would have the same schedule of updates
for 2010 & 2011, but in CY 2012, it would revert to the SGR
methodology, with an update “floor” of negative 3 percent.
Beginning in 2014, the fee schedule update for localities with two-year
average fee-forservice growth rates at or greater than 110 percent
of the national average would have a negative 6 percent floor. In
its letter, the AAMC warned that such an option did not provide
a “long-term, stable, predictable, sustainable solution.”
Regulatory:
On July 19 the Centers for Medicare and Medicaid Services (CMS)
published the proposed revisions for the Medicare 2010 Physician
Fee Schedule (74
Fed Reg 33520). CMS estimates the update for physician services
will decrease by 21.5 percent from calendar year 2009. Although
the update formula has produced negative updates since 2002, Congress
has often approved legislation that that prevented the cuts from
being implemented. It is expected that Congressional action also
will prevent the 2010 cuts. The projected cuts are the result of
an update methodology that is based on the sustainable growth rate
(SGR), a formula that calculates targets for physician spending.
CMS cannot modify the formula, but the agency is proposing to use
its administrative authority to remove physician administered drugs
from the update calculation. This will not affect the 2010 rates,
but will reduce the number of years physicians are projected to
receive a negative update, thereby reducing the cost of an SGR repeal,
should Congress choose to enact one.
The rule also makes several proposals to modify relative value
units (RVUs), which are the base units for physician payments. These
include replacing consultation codes with visit codes, using new
practice expense data, increasing the utilization rates for expensive
equipment, and updating malpractice expense data.
CMS estimates the RVU changes, without taking into account the
negative update, will increase payments to primary care by 6 percent
to 8 percent. Specialties receiving the highest positive updates
include: optometry (12 percent), physical and occupational therapy
(10 percent), family practice (8 percent), geriatrics (8 percent),
physical medicine (7 percent), general practice (6 percent), internal
medicine (6 percent), anesthesiology (6 percent), and interventional
pain management (6 percent). Specialties that are estimated to receive
at least a 10 percent decrease include: cardiology, interventional
radiology, nuclear medicine, radiation oncology, radiology, audiologist,
IDTFs, and portable x-ray suppliers. An UHC-AAMC Faculty Practice
Solution Center forecasting model confirms shifts in specialty payments,
but predicts an overall 2.4 percent increase in the professional
fees of faculty practices.
The rule also proposes implementation of a MIPPA provision that
requires the establishment of a “special payment rule for teaching
anesthesiologists.” For services furnished on or after January
1, 2010, the provision allows payment under the regular fee schedule
for the teaching anesthesiologist’s involvement in the training
of residents in either a single case or in two concurrent cases.
This is similar to the way in which teaching surgeons are paid.
The rule includes proposed changes to the Physician Quality Reporting
Initiative (PQRI) and the Electronic Prescribing Incentive Program,
such as including a group reporting option and allowing data submission
from electronic health records. The PQRI group reporting option
is based on the Physician Group Practice (PGP) demonstration. CMS
proposes that to participate group practices must have at least
200 eligible professionals within a single tax identification number
(TIN) and must agree to public reporting of performance data.
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