Proposed 2012 Medicare Physician Fee Schedule and Deficit Reduction Plan
October 5, 2011 – The proposed Medicare Physician Fee Schedule (MPFS) rule was issued on July 1, 2011 with public comments ending on August 31. The proposed 2012 estimated conversion factor will be $23.9635, a 29.5 percent reduction from 2011. It is expected that the MPFS final rule will be issued by November 1, 2011 and as discussed above, it is up to Congress to vote whether the SGR will be repealed or a temporary fix will be applied as in past years. Unfortunately, any Congressional vote will probably take place after the 2012 MPFS has been released.
Here are other highlights of the proposed rule:
- CMSwill significantly expand the potentially misvalued code initiative, focusing on the highest volume and dollar codes billed by physicians to determine whether these codes are overvalued and if E & M codes are undervalued.
- Propose changes to howCMSadjusts payments for geographic variation in the cost of practice.
- RADIOLOGY: Expand the multiple payment reduction to the professionalinterpretation of advanced imaging services, stating there are overlapping activities that go into valuing these services.
- PRIMARY CARE: Propose criteria for a health risk assessment (HRA) to be used in conjunction with the Annual Wellness Visits
- PRIMARY CARE: Propose to expand the list of services that can be furnished through telehealth to include smoking cessation services
- Update the incentive programs including PQRS, eRx and the EHR Incentive Programs
- Propose quality and cost measures that would be used in establishing a new value based modifier that would reward physicians for providing higher quality and more efficient care.
- Implement the third year of a 4-year transition to new practice expense relative value units
- ASCs: Implement a quality reporting program for ASCs by proposing eight quality measures beginning in CY 2012 for the CY 2014 payment determination.
- Pathology labs: prohibit independent laboratories from billing Medicare for the technical component of physician pathology services furnished to a hospital inpatient or outpatient beginning Jan. 1, 2012.
Review of Geographic Practice Cost Indices – Add On Payments
On September 21, a congressional subcommittee met to examine policies that allow for extra Medicare payments for certain medical services that have been extended year after year, some for over a decade. The extra payments added together total $2.3 billion annually and are set to expire on January 1, 2012.
There are several add-on services up for review, but the one that would most affect AHS clients is the GPCI (Geographic Practice Cost Indices) adjustments that pay higher Medicare reimbursement rates to doctors who practice in “expensive areas.” The Affordable Care Act had raised the floor GPCI rate, at a cost of $500 million per year, which increased payment for doctors practicing in a number of localities. The Institute of Medicine is in the process of evaluating the GPCI and recommending to Congress whether or not to retire this policy.
President Obama’s Deficit Reduction Plan
On September 19, President Obama introduced his deficit reduction plan that would cut $248 billion from Medicare and another $72 billion from Medicaid for a total of $320 billion over the next ten years. These cuts are part of the President’s overall plan to reduce the deficit by more than $3 trillion through a mix of spending cuts and tax hikes.
Of the proposed $248 billion cuts to Medicare, 90 percent would come from reducing overpayments in Medicare, most likely resulting in less payment for treating Medicare patients. However, the AMA believes these numbers assume the passage of a permanent fix to the SGR payment formula and these measures reflect how the President will pay for it.
The plan includes the following changes to the Medicare and Medicaid programs that would affect AHS clients; most will become effective in 2013 with the projected savings occurring over a 10 year period.
- Cutting special payments to rural physicians and hospitals by ending the “add-on” payment in certain low-population states – saves $2 billion
- Update Medicare payments to more appropriately account for utilization of advanced imaging. – saves $400 million.
- Require prior authorization for the most expensive imaging services – saves $900 million
- Reduce Medicare subsidies for teaching hospitals by 10 percent beginning 2013 – saves $9 billion
- Apply penalties against those Medicare providers that fail to show meaningful use in electronic records by 2015. The penalties would be credited to a special account beginning in 2020, and would be applied toward deficit reduction in 2021. – saves $500 million
- Apply penalties to providers if they fail to update their enrollment information as part of an initiative to reduce improper Medicare payments – no dollar amount given
- Target high drug prescribers and require States to track Medicaid drug claims for signs of waste, fraud, and abuse, by both providers and beneficiaries and to take steps to reduce abusive prescribing practices in the future. – no dollar amount given
These recommendations, along with many others affecting hospitals, medical suppliers and Medicare beneficiaries, have been sent to Congress and its appointed Joint Select Committee on Deficit Reduction, also known as the “super committee,” a bipartisan group that was tasked to find $1.5 trillion in savings in addition to the $1 trillion already put into place by the Budget Control Act of 2011.
The super committee must vote on all recommendations by November 23 and Congress must enact the final bill by December 23.
If the super committee can not come to an agreement or if Congress fails to vote on their proposed plan by the December deadline, a budget sequestration will kick in, making automatic cuts of $1.2 trillion across-the board for fiscal years 2013 – 2021, including cuts to the Medicare program. Medicare beneficiaries will be exempt from these cuts but providers would be subject to another 2 percent annual fee cut in order to achieve the required savings. These annual cuts would be in addition to the 29.5 percent SGR cut reduction scheduled for January 2012.
