CMS ANNOUNCES POLICY, PAYMENT RATE CHANGES FOR THE PHYSICIAN FEE SCHEDULE IN 2012
The Centers for Medicare & Medicaid Services (CMS) today issued a final rule with comment period that updates payment policies and rates for physicians and nonphysician practitioners (NPPs) for services paid under the Medicare Physician Fee Schedule (MPFS) in calendar year (CY) 2012. More than 1 million providers of vital health services to Medicare beneficiaries – including physicians, limited license practitioners such as podiatrists, and NPPs such as nurse practitioners and physical therapists – are paid under the MPFS. CMS projects that total payments under the MPFS in CY 2012 will be approximately $80 billion.
CMS is required to issue a final rule that reflects current law. Under current law, providers will face steep across-the-board reductions in payment rates, based on a formula– the Sustainable Growth Rate (SGR) – that was adopted in the Balanced Budget Act of 1997. Without a change in the law from Congress, Medicare payment rates to providers paid under the MPFS will be reduced by 27.4 percent for services in CY 2012—less than the 29.5 percent reduction that CMS had estimated in March of this year because Medicare cost growth has been lower than expected. This is the eleventh time the SGR formula has resulted in a payment cut, although the cuts have been averted through legislation in all but CY 2002. The Obama Administration is committed to fixing the SGR and ensuring these payment cuts do not take effect.
“This payment rate cut would have dire consequences that should not be allowed to happen,” said Donald M. Berwick, M.D., CMS administrator. “We need a permanent SGR fix to solve this problem once and for all. That’s why the President’s Budget and his Plan for Economic Growth and Deficit Reduction call for permanent, fiscally responsible reform and why we are committed to working with the Congress to achieve a permanent and sustainable fix.”
In the CY 2012 final rule, CMS is expanding the potentially misvalued code initiative, an effort to ensure Medicare is paying accurately for physician services and more closely managing the payment system. This year, CMS is focusing on the codes billed by physicians in each specialty that result in the highest Medicare expenditures under the MPFS to determine whether these codes are overvalued. In the past, CMS has targeted specific codes for review that may have affected a few procedural specialties like cardiology, radiology or nuclear medicine but has not taken a look at the highest expenditure codes across all specialties. This effort results in increased payments for primary care services that have historically been undervalued by the fee schedule.
“We believe strong efforts are needed to evaluate Medicare’s fee schedule to ensure that it is paying accurately and to ensure that Medicare beneficiaries continue to have access to vital services,” said Jonathan Blum, deputy administrator and director for the Center for Medicare.
CMS is also making changes in how it adjusts payment for geographic variation in the cost of practice. The Affordable Care Act and the Medicare and Medicaid Extensions Act made some temporary adjustments that were in place for two years while CMS and the Institute of Medicine (IOM) began to comprehensively study these issues. As part of this initiative, CMS is replacing some of the data sources—such as using data from the American Community Survey (ACS) in place of the Department of Housing and Urban Development (HUD) rental data and also using ACS data in place of the data currently used for non-physician employee compensation. Consistent with IOM’s recommendation, CMS is also adjusting its payments for the full range of occupations employed in physicians’ office as well as making other adjustments called for in prior year public comments. Although these improvements result in very little change to the indices, they show that the data Medicare has used in the past and will be using in the future produce consistent results—suggesting past year adjustments have accurately reflected geographic variations in the cost of practice.
The IOM provided its first of three reports on geographic adjustment factors to CMS on June 1. IOM provided a supplement to its report at the end of September that largely supported changes CMS is making in the final rule and recommended additional changes, many of which would require a change in law. CMS is continuing to evaluate all of the IOM’s recommendations.
Other changes being adopted in the final rule include:
The final rule with comment period will appear in the Nov. 28, 2011, Federal Register. CMS will accept comments on those provisions that are subject to comment until Jan. 3, 2012, and will respond in the MPFS for CY 2013.
For more information, see:
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