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2006 Medicare Physician Payment and Claims Processing: Questions and Answers

Congress adjourned in December without halting the 4.4 percent cuts in Medicare physician fees despite sustained efforts by ACP and other national medical organizations. Those cuts took effect January 1, 2006. Prior to adjournment, the House and Senate passed companion budget measures to extend physician payments at 2005 levels through 2006, but unfortunately final action was delayed because of unrelated procedural issues. The House of Representatives needed to pass a revised version of the budget bill upon its return. The House passed this legislation on February 1, and it retroactively removes the cuts as of January 1. The bill was subsequently signed into law by the President on February 8. The following are answers to a number of frequently asked billing questions regarding the initial physician fee reduction and the anticipated return of payments to 2005 level. This guidance is primarily based upon information released by the Centers for Medicare and Medicaid Services (CMS).

1. What will I be paid for 2006 claims submitted prior to the enactment of the legislation?

As of January 1, 2006, most claims for physician fees submitted prior to the enactment of this legislation reflected a reduction of 4.4 percent from their 2005 level. A small number of claims adjustments differ slightly from 4.4 percent due to changes in the related service’s relative value implemented by CMS in 2006.

2. What will happen to 2006 claims now that the legislation has become law?

The 4.4 percent fee reduction will be removed and claims will be paid at the 2005 level, except for the small number of services that had their relative value changed in 2006 by CMS. The changed relative value will result in a fee different from the 2005 level.

3. What will happen to claims submitted prior to the enactment of the legislation reversing the cuts?

All 2006 claims submitted prior to the enactment of the legislation will be reprocessed and adjusted to the 2005 rate. CMS plans to reprocess automatically all of the 2006 claims submitted prior to the legislation’s enactment and provide physicians with the additional amounts spread out between February and June. Physicians will not have to resubmit these claims. Physicians will receive remittance statements that will show the adjusted amounts.

4. Will secondary payers also make automatic adjustments now that the legislation is enacted or will I have to resubmit all my pre-enactment 2006 claims to the appropriate insurance plan?

CMS has instructed carriers to forward adjusted claims to Medigap and secondary insurers if their agreements accept adjustments. Thus, most Medigap plans and some secondary insurers will also make automatic adjustments. Resubmission of the claim will be necessary for some secondary insurers in order to receive the balance of payment due.

5. Will I have to collect co-payments and deductibles from beneficiaries on the additional amounts received from the reprocessed claims once the legislation becomes law?

The CMS recognizes that the updated, reprocessed claims would technically require additional co-payments and deductible payments from beneficiaries. Moreover, a waiver of this additional cost-sharing by a physician, although small in monetary amount, could be viewed as violating the Medicare Anti-Kickback law. After discussing this issue with the Department of Health and Human Services (HHS) Office of the Inspector General, the CMS believes that the waiver of this additional amount would not violate the kickback law. ACP will let members know immediately if the Inspector General's office issues any guidance. If a physician chooses to collect the remaining balance --- he or she can either do so immediately or hold it as a patient balance to be paid upon future visits.

6. Will I be able to change my Medicare participation decision now that the legislation is enacted and the fees return to the 2005 levels?

CMS is offering an additional enrollment period for doctors to reconsider their Medicare participation decision in light of the improved payment situation. The original enrollment period ran from Nov. 15 to Dec. 31, 2005. The extended enrollment period will run an additional 45 days, to begin soon after the enactment of the legislation. The exact starting date of this extended enrollment period has not yet been determined. ACP will provide this information when it is available from CMS.

Page updated: 02-09-06