Medicare Unveils Plan to Cut Doctor Pay by 30%

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Medicare Unveils Plan to Cut Doctor Pay by 30%

By Joyce Frieden, News Editor, MedPage Today
Published: July 06, 2011

WASHINGTON -- The Centers for Medicare and Medicaid Services has issued its proposed changes to the 2012 Medicare Physician Fee Schedule, including a long anticipated -- and long-feared -- plan to cut Medicare pay to physicians by 30%.

The agency is required to issue the fee schedule based on current payment rules. Using the Sustainable Growth Rate (SGR) formula now in effect, physicians are scheduled for a nearly 30% decrease in reimbursement beginning in 2012. Although similar cuts have been averted almost every year by last-minute Congressional reprieve, CMS cannot assume such a reprieve will occur and must issue its proposed fee schedule as if the payment cut were going to go into effect.

The proposed rule, issued Friday, includes a "significant" expansion of the agency's so-called "misvalued code initiative", which CMS describes as an effort to ensure that Medicare is paying accurately for physician services and closely managing payments. "This year, CMS is focusing on the highest volume and dollar codes billed by physicians to determine whether these codes are overvalued and if evaluation and management codes are undervalued," the agency noted in a press release.

In previous years, CMS has reviewed specific codes in a few particular specialties, but has not undertaken this broad of a review.

"We believe strong efforts are needed to evaluate Medicare's fee schedule to ensure that it is paying accurately and ensuring that Medicare beneficiaries continue to have access to vital services, such as primary care services," Jonathan Blum, CMS deputy administrator, said in the release.

The proposal also contains changes in adjustments for costs based on geographical area. The Affordable Care Act required CMS and the Institute of Medicine (IOM) to study geographic variation, and the IOM issued its first of three reports on the subject on June 1.

As part of the initiative to improve geographic variation adjustments under Medicare, the agency is replacing some of its data sources, as well as making other changes based on public comments from prior years.

Other changes in the proposed rule include:

Expanding the "multiple procedure payment reduction" to include interpretation of advance imaging procedures, "to recognize the overlapping activities that go into valuing these services."
Releasing criteria for a health risk assessment that can be done during the annual wellness visits now covered by Medicare. "This proposal is intended to support a systematic approach to patient wellness and to provide the basis for a personalized prevention plan," CMS noted.
Adding smoking cessation services to the list of covered telehealth services.
Beginning to establish a new "value-based modifier" to reward doctors for providing higher quality, more efficient care. The modifier would debut in 2015 and be used only for certain physicians and physician groups, but would be extended to include all physicians by Jan. 1, 2017. This year's rule includes proposed quality and cost measures that would be included in the modifier.
The proposed rule also would implement the third year of a four-year transition to new practice expense relative value units, using data from a physician practice survey authorized in fiscal year 2010.

CMS administrator Donald Berwick, MD, expressed concern about the cut in physician payments. "This payment cut would have serious consequences and we cannot and will not allow it to happen," he said in the statement. "We need a permanent SGR fix to solve this problem once and for all. That's why [President Obama's] budget and his fiscal framework call for averting these cuts, and we are determined to pass and implement a permanent and sustainable fix."

Including the cut, total payments under the fee schedule, if adopted, would be $80 billion in calendar year 2012. That money would be used to reimburse nearly one million providers, including limited license practitioners such as podiatrists, as well as nurse practitioners and physical therapists, in addition to physicians.

CMS will accept comments on the proposed rule until Aug. 30, and plans to issue a final rule by Nov. 1.

The agency also issued a proposed rule for payments to dialysis facilities in 2012; CMS is proposing a 1.8% increase in those payments. The proposal includes reductions in payments to dialysis centers that do not achieve high enough performance scores under the agency's Quality Improvement Program. It also includes seven new criteria for assessing the quality of dialysis care.

On Tuesday, CMS issued its proposed rule for payments to home health agencies in 2012. That rule calls for a 3.35% decrease in payments due to "the combined effects of market basket and wage index updates (a $310 million increase) and reductions to the home health prospective payment system rates to account for increases in aggregate case-mix that are largely related to billing practices and not related to changes in the health status of patients (a $950 million decrease)," according to CMS.

http://www.medpagetoday.com/PublicHealthPolicy/Medicare/27430