Press release




The Centers for Medicare & Medicaid Services (CMS) today announced final changes to policies and payment rates for services to be furnished during calendar year (CY 2010) by over 1 million physicians and nonphysician practitioners who are paid under the Medicare Physician Fee Schedule (MPFS).  The MPFS sets payment rates for more than 7,000 types of services in physician offices, hospitals, and other settings.  Today’s action complies with federal law, which requires these policies and payment rates to be announced by Nov. 1.

Current law requires CMS to adjust the MPFS payment rates annually based on an update formula which requires application of the Sustainable Growth Rate (SGR) that was adopted in the Balanced Budget Act of 1997.  This formula has yielded negative updates every year beginning in CY 2002, although CMS was able to take administrative steps to avert a reduction in CY 2003, and Congress has taken a series of legislative actions to prevent reductions in CYs 2004-2009.  In the absence of Congressional action for the CY 2010 physician update, the final rule with comment period will reduce the conversion factor for services on or after Jan. 1, 2010 by 21.2 percent rather than the -21.5 percent projected in the proposed rule.  The difference is due to the use of the most recently available data on CMS spending for physicians’ services.

“The Administration tried to avert the pending fee schedule cut in the FY 2010 budget proposal that it submitted to Congress, and remains committed to repealing the SGR,” said Jonathan Blum, director of the CMS Center for Medicare Management.   “In the meantime, CMS is finalizing its proposal to remove physician-administered drugs from the definition of ‘physicians’ services’ for purposes of computing the physician fee schedule update.  While this decision will not affect payments for services during CY 2010, CMS projects it will have a positive effect on future payment updates.”


In the final rule with comment period, CMS is also adopting several refinements to Medicare payments to physicians which will improve payment rates for primary care services relative to other services.  For 2010, for purposes of establishing the practice expense (PE) relative value units (RVUs), CMS had proposed to include data about physicians’ practice costs from a new survey, the Physician Practice Information Survey (PPIS), designed and conducted by the American Medical Association.  CMS is finalizing the proposal, but will phase it in over a four year period.  In addition, CMS will not use the PPIS data to determine the practice expenses for  medical oncology, but instead will continue to use specialty supplemental survey data , as indicated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).

CMS is also finalizing its proposal to stop making payment for consultation codes other than the G codes that are used to bill for telehealth consultations, and to redistribute the resulting savings to increase payments for the existing evaluation and management (E/M) services.   CMS will adjust the payment for the surgical global period to reflect the higher value of the office visits furnished during the global period.

In the final rule with comment period, CMS is adopting two significant modifications to its proposal to increase the equipment utilization percentage that is assumed for purposes of setting PE RVUs.  CMS will increase the equipment utilization rate assumption used to determine the practice expense for expensive equipment priced over one million dollars from 50 to 90 percent but will phase in this change over a four year period.  CMS also will not apply this change to expensive therapeutic equipment.

CMS is increasing payment for the Initial Preventive Physical Exam (IPPE), also called the “Welcome to Medicare” visit to be more in line with payment rates for higher complexity services.   Originally established in the MMA, the IPPE benefit now pays for an initial assessment of key elements of a beneficiary’s health within one year of the beneficiary’s enrollment in Medicare Part B.

Taking all changes in the final rule with comment period into account, CMS projects that payments to general practitioners, family physicians, internists, and geriatric specialists will increase by between 5 and 8 percent, prior to application of the negative update required by the SGR.

The final rule with comment period also implements a number of provisions in the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) including:

  • Adding new Medicare benefit categories for cardiac and pulmonary rehabilitation services and for chronic kidney disease (CKD) education beginning Jan. 1, 2010.   The final rule with comment period outlines what these programs will entail, how they will be paid under the MPFS and the criteria for covering these services. 
  • Increasing the Medicare share of payments for outpatient mental health services to 55 percent from 50 percent, beginning a gradual transition to bring payment parity for mental health and medical services furnished to Medicare beneficiaries. 
  • Implementing a requirement that suppliers of the technical component of advanced imaging services be accredited beginning Jan. 1, 2012.   The accreditation requirement will apply to mobile units, physicians’ offices, and independent diagnostic testing facilities that create the images, but will not apply to the physician who interprets them.  CMS will address suppliers’ accountability, business integrity, physician and technician training, service quality, and performance management through additional guidance. 

The final rule with comment period contains a number of provisions to promote improvement in quality of care and patient outcomes through revisions to the Electronic Prescribing Incentive Program (e-Prescribing Program) and the Physician Quality Reporting Initiative (PQRI).  Specifically, the final rule simplifies the reporting requirements for the electronic prescribing measure, provides eligible professionals with more reporting options, and establishes a new process for group practices to be considered successful electronic prescribers.  Eligible professionals or group practices that meet the requirements of each program in CY 2010 will be eligible for incentive payments for each program equal to 2.0 percent of their total estimated allowed charges for the reporting periods. 

In addition, CMS is adding measures for eligible professionals to report under the PQRI, providing a mechanism for participants to submit quality measure data from a qualified electronic health record and creating a process for group practices to use for reporting the quality measures.

The final rule with comment will appear in the Nov. 25, 2009 Federal Register.  CMS will accept comments on designated provisions of the final rule with comment period until Dec. 29, 2009, and will respond to all comments at a later date.  Unless otherwise specified, the new payment rates and policies will apply to services furnished to Medicare beneficiaries on or after Jan. 1, 2010.

To view a copy of the final rule with comment period, please see:

A fact sheet providing more information about the e-Prescribing Program and PQRI provisions can be found at:


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