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Specific Medicare Physician Fee Schedule 2010 Changes

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Background

CMS released the 2010 Medicare physician fee schedule final rule on October 30, 2009 in the form of a "final rule." The 2010 fee schedule includes many issues important to internal medicine. The CMS decisions on these key issues have an impact on the relative value units (RVU) assigned to each individual physician service. CMS assigns a RVU that represents the relative resource costs associated with the physician work, practice expense (overhead), and professional liability insurance for each individual physician service. After the RVU for each of these three components is adjusted for geographic cost differences, the total RVU for each service is multiplied by a dollar conversion factor (CF).

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Overall Impact

While the impact of the changes in the 2010 final rule on an individual physician depends on the mix of services he or she furnishes, CMS provides an estimate of the impact of the changes on each physician specialty. In addition to providing a total impact estimate, CMS provides an estimated impact for each of the three components—work, practice expense, and professional liability insurance. Because the agency decided to implement a high-impact change to the practice expense component over a four-year period, CMS also provides an estimate of the impact for 2010 had this change been fully implemented in 2010. As a result, CMS provides "full impact" and "transition impact" estimates for both the practice expense component and for the 2010 total that reflects all three components.

CMS estimates that all the changes in the final rule will collectively increase the aggregate Medicare allowed charges paid to general internal medicine by 2% in 2010—the gain would have been 5% without the four-year transition of the high-impact practice expense change. Some internal medicine subspecialties, on average, also gain in 2010, with a 3% increase in allowed charges to geriatrics being the largest estimated bump. CMS estimates that the allowed charges for some internal medicine subspecialties, on average, will be unchanged in 2010 from their 2009 level. Some internal medicine subspecialties, on average, see a decline in allowed charges in 2010, with the 8% estimated decrease to cardiology being the largest.

The CMS specialty impact estimates indicate the change in the total amount of allowed charges paid to all physicians identified by Medicare as practicing each particular specialty. Because the estimated impact per specialty ultimately results from changes in the payments for all of the services performed by physicians in that specialty, the impact can be highly variable within a specialty depending on an individual physician’s mix of services. For instance, office visits and some other evaluation and management services gain substantially from the changes, while some procedures, such as many imaging procedures, get reduced payments. An internist or internal medicine subspecialist who provides predominantly office visits will fare better than an internist or subspecialist who furnishes more of the procedures that will receive reductions.

Also, it is important to emphasize that the specialty impact estimates are not the result of a deliberate decision by CMS to help one specialty at the expense of another. Rather, it is the consequence of the use of new, more current data and other policy decisions. The CMS change to the practice expense component illustrates this point. Even though primary care physicians, on average, gain while some subspecialties, like cardiology, see reductions, this is because of a CMS decision to use data from a recent national survey to determine the practice expense RVUs. It is not a policy decision to increase payments to primary care at the expense of some subspecialists. Many other non-primary care specialties, on average, will also see gains over the course of the four-year phase-in, if not in 2010.

Further, this practice expense component change has nothing to do with the health reform legislation being considered by Congress. In fact, more than 70 physician specialty organizations joined the American Medical Association in calling for a national survey intended to update the data used to determine practice expense RVUs in 2006—long before the current health reform process began.

The complete specialty impact table that CMS published in the final rule is at http://www.acponline.org/advocacy/where_we_stand/
medicare/impact_table.pdf

The CMS impact estimates assume no change to the 2009 conversion factor. Congress enacted a law requiring that the 2009 conversion factor be used for the first 60 days of 2010. Congress intends for this "bridge" period to provide it with time to enact a more lasting fix to the flawed SGR formula system that is producing payment cuts through health reform legislation. The impact estimates would change equal to any SGR change that takes effect beginning on March 1, 2010.

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Billing for Consultation Services

In a dramatic shift in coding policy, Medicare will no longer recognize the Current Procedural Terminology (CPT) consultation service codes for payment purposes beginning January 1. CMS, which announced this decision through the 2010 fee schedule final rule it released on October 30, requires that physicians bill the consultation services they furnish using the office/outpatient visit, initial hospital care, and initial nursing facility care service codes. The CMS decision affects how much physicians are paid not only for consultations but also for office, initial hospital, and initial nursing facility visits.

CMS has been slow to release detailed billing guidance. This has been frustrating for ACP and presents a serious challenge to physicians to know the rules they will be expected to follow beginning on January 1. ACP is urging CMS to delay implementation of this change in large part because of the insufficient amount of time to inform physicians.

Coding and Billing Guidance

ACP provides basic instructions for how to bill consultation services, which is based on the limited information CMS made available with its October 30 announcement of the policy change, at http://www.healthbanks.com/PatientPortal/MyPractice.aspx?UAID=
{A830907D-8345-4AA5-A0D5-F8776BBC08BB}&TabID={X}&ArticleID=633932.

CMS released more detailed billing information on December 15. This information is available at http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM6740.pdf.
A CMS Q&A document, on the Medicare consultation services billing, is available at http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE1010.pdf ACP will provide additional guidance after it completes its review of this CMS release. Further, ACP intends to describe the billing rules on the January 2010 ACP Internist and in subsequent editions. Watch for information at www.acpinternist.org.

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ACP Position/Advocacy

Current ACP Position on CMS Decision to Cease Recognition of CPT Consultation Service Codes for Payment Purposes

ACP is concerned about the CMS policy that no longer recognizes the CPT consultation service for Medicare payment purposes. CMS implemented this policy change on January 1, 2010 without sufficient notice of the change and without specific guidance on how physicians should bill their services in the absence of these codes. In early December 2009, ACP called on CMS to delay its implementation of this policy change to allow more time to address the outstanding issues (ACP had led an effort with the internal medicine subspecialty organizations to identify a list of issues that CMS should address related to the policy). In recognition of the fact that CMS was not dissuaded from implementing this policy change on January 1, 2010, ACP is talking with internal medicine subspecialty organizations about potential actions that could improve this difficult situation. ACP is appreciative of the fact that a number of subspecialty organizations are leading the effort to identify improvement options and the College intends to use its forums for convening subspecialty organizations to help develop these options and determine strategy.

ACP did indicate to CMS that the concept of ceasing recognition of the CPT consultation service codes for Medicare payment purposes was acceptable when the agency first proposed the change in Summer 2009. The College, however, indicated that its acceptance was contingent on the agency: providing detailed guidance on a number of issues of nuance related to billing; and making reasonable payments to physicians for consultation services even without the ability to bill the CPT consultation service codes. A primary reason ACP even provided conditional acceptance of the CMS proposed change is the documented difficulty inherent to billing consultations correctly and the excessive audit liability faced by physicians resulting from a 2006 CMS shift to a more rigid definition of what constitutes a consultation service (a shift not well understood by physicians). Regardless, ACP determined that CMS did not address the College's recommended issues when responding to public comments on its proposed policy change in October 2009. The College, thus, decided it would re-open its position on the consult issue--taking the current position described in the paragraph above.

ACP continues to refrain from simply calling for CMS to rescind its change because doing so would not resolve the audit concern issue and physicians would be open to significant liability in the form of requests for re-payment of overpayments. An ACP-compiled timeline showing the history of the consultation service codes, including Medicare’s rules and concerns pertaining to them, is at http://www.acponline.org/running_practice/practice_management/payment_coding/medicare/changes2010/timeline.pdf

Detailed information on the CMS consultation service billing policy change and ACP positions is at http://www.acponline.org/running_practice/practice_management/payment_coding/medicare/changes2010/feeschedule.htm#bill, under the heading “Billing for Consultation Services.”

(April 2010)

Coalition Letter to CMS Acting Administrator Tavenner, Urging Improvements in Medicare Payments for Consultations (June 18, 2010)

CMS Discussion of Change (excerpt from Federal Register)

Read the CMS discussion of its final rule decision to no longer recognize consultation service codes for payment purposes, which includes a response to some of the comments the agency received when the policy change was in the proposed stage.

Audit Liability Concern

ACP continues to advocate that CMS delay implementation of the consultation service policy change. It is open to exploring options that provide a more satisfactory resolution to the on-going discord between CMS and the physician community regarding appropriate billing of consultations. The College continues to be concerned about excessive physician exposure to audit liability associated with this discord and resulting lack of clarity and believes that a solution should address this issue. ACP will continue to work with the subspecialty organizations in pursuit of an adequate solution.

View a timeline showing the history of the consultation service codes, including Medicare’s rules and concerns pertaining to them.

Private Payer Policies

The UnitedHealthcare policy for billing for consultation services is at https://www.unitedhealthcareonline.com/ccmcontent/ProviderII/UHC/en-US/Assets/ProviderStaticFiles/ProviderStaticFilesPdf/News/2010/ConsultationCode_Update.pdf.

The Aetna policy for billing for consultation services is at http://www.acponline.org/running_practice/practice_management/payment_coding/medicare/changes2010/aetna.htm.

ACP will list the consultation billing policy for other private payers as they become available.

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Payment for Practice Expense, or Overhead, Component

Use of New Practice Cost Survey Data to Update Practice Expense Payments

Background

CMS uses data on the cost of operating a physician practice to establish a practice expense per hour (PE/hr) figure for each Medicare-recognized physician specialty. The PE/hr figure plays a large role in determining the practice expense RVU assigned to each service. The practice expense RVU plays a significant role in determining the payment amount as it accounts for, on average, about 44% of the total RVU assigned to each service.

CMS Decision to Use New Survey Data

CMS decided to use the PE/hr figures derived from the results of the recent practice cost survey conducted through the American Medical Association (AMA) to update practice payments. This AMA survey is referred to as the Physician Practice Information Survey (PPIS). The PPIS collected practice cost data from physicians in all specialties (and from non-physician practitioners). The AMA, with the assistance of a contractor, used the data from each specialty to calculate a PE/hr figure for each specialty. CMS showed confidence in the PPIS by purchasing the data and then stating its intent to use the PE/hr figures that resulted from it in the July 2009 proposed rule. The PE/hr figures help determine the pool of practice expense dollars available to be spread across the services that physicians of that specialty furnish. Thus, the PE/hr figures ultimately manifest in the form of changes to the practice expense RVU assigned to individual physician services.

CMS will transition the changes that result from use of the PPIS-derived PE/hr figures over a four-year period: 25% in 2010; 50% in 2011; 75% in 2012; and 100% in 2013. The rationale for the agency’s transition decision is that there is precedent for phasing-in practice expense methodology changes and that the significant impact on individual physician services and, thus, specialties, warrants it.

Impact on Internists and Other Physicians

Because the law requires that CMS maintain expenditures on physician services consistent from one year to the next, using the PPIS data to update practice expense methodology redistributes payments within the physician payment pool. It does not increase the overall amount devoted to payment for physician services.

While the PPIS is used to calculate the per-specialty PE/hour and CMS estimates impact of the updated PE/hour in the form of aggregate payments to each specialty, individual physicians experience the impact in the form of how the use of the PE/hr data affects payments for the individual services that they furnish. Use of the PE/hr figures increases the practice expense RVU, and, thus, the total payment, for many evaluation and management services that are furnished by all physicians. Payments for some procedures and tests do decrease as a result of the data. Accordingly, the mix of services that a physician provides determines the precise impact.

That being said, CMS does include an estimate of the 2010 impact of use of the new PE/hr figures for each specialty. Because CMS decided to implement changes that result from use of the PE/hr figures over a four-year period, the agency also provides the estimate of the impact for 2010 had this change been fully implemented in 2010. The remaining 75% of the change that results from the use of the PE/hr figures will be phased in over the period 2011-2013. CMS does not provide a specific estimate for the impact on specialties in each of these subsequent three years but the agency’s estimate of the amount of the change in allowed charges if the changes were fully implemented in 2010 is a solid indication. The table below lists the CMS-estimated impact of the practice expense changes for 2010 for selected internal medicine specialties.

Specialty	Impact in 2010 of Practice Expense Change Transition	Impact if Change Was Fully Implemented in 2010
General Internal Medicine	1%	4%
Geriatrics	2%	6%
Infectious Disease	0%	3%
Pulmonary Medicine	0%	2%
Hematology/Oncology	-1%	-5%
Cardiology	-5%	-10%

 

ACP Position

ACP supports use of the PPIS data to update the PE/hr figures that CMS uses to determine practice expense RVUs. The College support for use of the PPIS data is based on: the practice cost data used to determine 2009 RVUs are dated and were collected from multiple sources; long-standing ACP support for an all-specialty survey of practice costs to update the data that CMS uses in its practice expense payment methodology; and that ACP and other physician specialty societies had substantial input into the survey.

While supporting the use of the data, ACP recommends that CMS establish an open and transparent process by which to address concerns from specialty organizations about data elements that pertain to their specialty. Also, ACP encourages CMS to provide a detailed description of its decision-making related to use of the survey data to enable all stakeholders to have a more complete understanding.

A detailed description of the CMS use of the PPIS survey data to update practice expense payments and more information on the ACP position is in the "Practice Expense Payments" section of the document at http://www.acponline.org/advocacy/where_we_stand/medicare/
medfee10_faq.pdf.

Change in Assumption that Impacts Payment for Advanced Imaging Services

CMS Decision

CMS decided to increase the rate that it assumes that equipment involved in furnishing services that costs more than $1 million to 90% beginning in 2010, up from the 50% rate assumed in 2009. The use of a higher assumed use rate lowers the practice expense RVU for the services involving expensive equipment as it spreads the lifetime cost of the equipment over more units of service. Physicians who own expensive equipment, e.g. MRI, CT, will receive lower Medicare payment for services that involves use of these machines. The "savings" that result from the lower payment for the affected services are redistributed in the form of a slight increase in payment for all other services. CMS states that the impact of this change is minimal on each specialty except for the negative impact on the few that commonly furnish services involving expensive equipment.

ACP Position

ACP supported the increase in the assumed use rate for equipment that costs $1 million or more. The College has long-standing policy urging CMS to review the equipment utilization assumption rate, with an emphasis on reassessing the rate pertaining to high-cost equipment. ACP has maintained that the 50% assumed rate is too low for high-cost equipment, thus, resulting in distorted payments. The Medicare Payment Advisory Commission (MedPAC), a entity that advises the Congress and CMS on Medicare issues, and the committee of physicians maintained by the AMA and the specialty organizations that advises CMS on Medicare payments have consistently recommended an increase in the assumed rate to more accurately reflect the use of expensive equipment. MedPAC and other experts have documented how inaccurate payment rates impact the availability of services and affect utilization. The non-partisan Congressional Budget Office (CBO) has stated that the high acquisition cost for advanced imaging equipment, which is generally more than $1 million, provides a strong incentive to optimize the amount of time it is in use.

ACP encourages CMS to create mutually exclusive categories of equipment with different utilization rates after it takes this initial step of increasing the rate for high-cost equipment. The College also urged the agency to address whether equipment use varies by geographic area, especially for less expensive equipment. The College believes these steps would increase the accuracy of payments for all services that involve equipment.

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Initial Preventive Physical, or "Welcome to Medicare," Exam

CMS increased the work RVU assigned to the code that describes the Initial Preventive Physician Exam, also known as the "Welcome to Medicare" exam since it must be furnished with a year of when a beneficiary enrolls in Part B to be covered. CMS increased the work RVU from 1.34 to 2.30. This will increase the Medicare payment for the Welcome to Medicare exam significantly beginning in 2010. The CMS-assigned 2.30 work RVU is equal to the work RVU assigned to CPT 99204, Evaluation and management new patient, office or other outpatient visit. CMS determined that the intensity and effort associated with the Welcome to Medicare exam is equal to this moderate-to-high-level new patient office visit service.

ACP supported the increase in the work RVU for the Welcome to Medicare exam service as the College argued that the service was undervalued since it was established in 2005.

The ACP description of the Welcome to Medicare exam service and guidance on how to bill for it is at http://www.acpinternist.org/archives/2009/03/coding.htm.

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Reduction in Beneficiary Co-payment for Outpatient Psychiatric Services

To implement a provision in a 2008 law, CMS is gradually reducing the beneficiary co-payment for outpatient services justified with a psychiatric diagnosis code, generally ICD-9 codes in the 290 – 319 range, to the 20% level that pertains to most other physician services. Prior to 2010, Medicare pays 50% of the allowed charge and the beneficiary pays 50%. The patient will pay 45% in 2010, with the amount gradually reduced to 20% in 2014. The table below shows the reduced-co-payment progression.

Year	Patient Pays	Medicare Pays
2009	50%	50%
2010-2011	45%	55%
2012	40%	60%
2013	35%	65%
2014	20%	80%

 

ACP advocated for the provision in the legislation that gradually eliminates the increased patient co-payment for outpatient psychiatric services as the College as long-opposed this punitive policy.

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