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Medicare News
Medicare Final Rule Cuts Physician Pay Five Percent
for 2007
CMS says rule
encourages more physician-patient communication
 November 3, 2006 – The 5.1 percent cut in pay for
physicians in 2007 proposed by Medicare has been reduced to something
closer to 5 percent, according to the final rule issued by the Centers
for Medicare & Medicaid Services this week. The war may not be over,
however, since the American Medical Association was still pressing
Congress to override the pay cut when they took their election recess.
(See AMA reaction in sidebar.)
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Related Stories |
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Medicare Doughnut Hole and Physician Pay Cuts Get
Attention in House Ways and Means
Congressional session
nears end, members try to tie up loose ends
September 21, 2006 – Two of the hottest Medicare
discussion topics received attention in the House Ways and Means
Committee yesterday – how to plug the drug program "doughnut hole" and
how to make the doctors happy with cuts in their Medicare pay. Democrats
released a report showing the vast majority of those in stand-along drug plans
do not have any coverage when they fall into the doughnut hole.
Republicans were trying to convince physicians to accept quality-of-care
data reporting in exchange for reducing or eliminating their pay cut.
Read
more...
AMA Turns Up the Heat to Get Congress to Stop
Medicare Pay Cut
Physicians group issues survey again saying care
for seniors threatened
September 8, 2006 – The American Medical
Association turned up the heat yesterday to press Congress to take
action to stop the planned cut in their payments from Medicare, as it
has in past years. They issued a news release targeting senior citizens
saying a survey it commissioned has found 86 percent of Americans are
concerned that seniors’ access to health care will be hurt if the cuts
go through. The Bush administration "is showing no sign that it wants to
hold off the cuts," and aides to congressional leaders have indicated
that no action is likely to take place, according to the daily report by
KaiserNet.org. (See AMA news release below news report.)
Read more...
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Medicare says their proposal will pay physicians
more for the time they spend talking with Medicare beneficiaries about
their health care and will pay for a broader range of preventive
services.
The changes, which will become effective January 1,
2007, are included in the Medicare Physician Fee Schedule (MPFS).
CMS projects that it will pay approximately $61.5
billion to over 900,000 physicians and other health care professionals
in 2007 as a result of the payment rates and policies adopted in this
rule.
"This new spending figure reflects current law
requirements to reduce payment by 5 percent to account for the combined
growth in volume and intensity of physician services," CMS said in the
fact sheet on the rule.
“The rule we are announcing today will pay
physicians more for the time they spend talking with their patients
about their health care,” said Leslie V. Norwalk, CMS Acting
Administrator. “We believe that this emphasis on personalized care will
lead to better outcomes for patients, and more efficient use of health
care resources.”
The hallmark of this rule is a stronger emphasis on
the physician-patient relationship, emphasized CMS.
The final rule increases significantly the work
component for the RVUs for the face-to-face visits (evaluation and
management or “E&M services”) during which the physician and patient
discuss the patient’s health status and the steps that can be taken to
maintain or improve the patient’s health.
For example, CMS cites the work component for RVUs
associated with an intermediate office visit, the most frequently billed
physician’s service, is increasing by 37 percent.
The work component for RVUs for an office visit
requiring moderately complex decision-making and for a hospital visit
also requiring moderately complex decision-making are increasing by 29
percent and 31 percent respectively. Both of these services rank in the
top 10 most frequently billed physicians’ services out of more than
7,000 types of services paid under the physician fee schedule.
The increases in the work component for E&M
services are the result of a comprehensive review of the values CMS has
placed on the physician work involved in providing a service. Medicare
law requires that this review be conducted at least every five years.
Consistent with longstanding practice, CMS worked
with the Relative Value Update Committee (RUC), which operates under the
auspices of the American Medical Association, to review work relative
value units for over 400 services. The RUC recommended the proposed E&M
increases, and many of the specialty societies commented favorably on
them in their comments on the proposed MPFS rule.
“We believe this increase in the work component
will encourage physicians to spend more time with their patients,
assessing their health status, and educating them about how to live
longer, healthier lives,” said Ms. Norwalk.
Beginning January 1, Medicare will expand its
preventive services benefits, as provided for in the Deficit Reduction
Act of 2005 (DRA).
Medicare will pay for preventive ultrasound
screening for abdominal aortic aneurysms (AAA) for at risk beneficiaries
as part of the Welcome to Medicare physical. AAA refers to a weakening
in the wall of the large artery that takes blood from the heart to the
body. Caught early, there are a number of treatment options, but if the
AAA ruptures, it can be fatal. AAA affects 6-9 percent of men over 65
and is the 10th leading cause of death for men over 55.
The screening will be available to men aged 65 to
75 who have smoked at least 100 cigarettes in their lifetimes,
individuals with a family history of AAAs and any other individuals
recommended for screening by the United States Preventive Services Task
Force.
The rule expands the number of beneficiaries who
qualify for bone mass measurement due to long term steroid therapy. For
these beneficiaries, the rule reduces the dosage equivalent required for
eligibility by one-third, from an average of 7.5 milligrams per day of
prednisone for at least three months to 5.0 milligrams.
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AMA Reaction to Final Rule |
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AMA: CMS Medicare payment rule reminder of need for
congressional action
AMA Board Chair Cecil B. Wilson, MD, issued the following
statement:
"Today's release of the Medicare physician payment rule serves
as a harsh reminder of the need for congressional action to stop
next year's Medicare physician payment cut due to the flawed
payment formula. For the last five years, Medicare physician
payments have failed to reflect the government's own measure of
annual increases in medical practice costs, with current
payments about what they were in 2001. For nearly half of
physicians, the 2007 Medicare payment cuts will range from 6 to
20 percent because of additional payment policy changes.*
"We agree that the increases in payments for physician office
visits are important, but the overall physician payment cut due
to the flawed payment formula will negate any overall payment
increase for primary care physicians. The rule indicates that
family physicians will have an average net payment change of
zero and internists face a net cut of one percent."
"Physicians are left with choices they do not want to make:
Nearly half of physicians tell the AMA they will be forced to
reduce the number of new Medicare patients they treat. And
because TRICARE rates are tied to Medicare payment rates,
military families will also be affected by the cuts with reduced
access to care. The cuts are also forcing physicians to make
other hard decisions like reducing staff and postponing
investments in health information technology and new medical
equipment.
"The AMA is deeply disappointed that once again CMS has declined
to take administrative actions within their power to lessen the
severity of the Medicare cut, such as removing
physician-administered drugs from the flawed Medicare physician
payment formula.
"America's Medicare patients and the physicians who care for
them are running out of time, with only two months left until
Medicare cuts begin on January 1. Eighty Senators and 265
Representatives have sent letters to the congressional
leadership calling for action this Congress. Congress must act
during the upcoming lame-duck session to stop the cuts and
provide payments that reflect practice costs, so seniors can
continue to receive high quality health care."
*Additional changes that negatively impact 2007 physician
payments include:
● CMS rule on the 5-year review of payments for physician work
produces a negative 5 percent budget neutrality adjustment
● Revised methodology for determining practice expense
payments
● Expiration of Medicare Modernization Act’s three-year
increase in geographic payment adjustments (GPCIs)
● Deficit Reduction Act (DRA) cuts for imaging services
provided by physicians |
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The final rule also exempts the colorectal cancer
screening benefit from the Part B deductible, eliminating a potential
financial barrier to using this benefit. Colorectal cancer is the second
leading cause of cancer deaths, and survival is closely related to the
stage of the disease at diagnosis. The five-year survival rate when the
cancer is detected early approaches 90 percent. Unfortunately,
approximately 65 percent of patients present with advanced disease.
Once the lymph nodes are involved, chances of survival drop to a range
of 35 to 60 percent and with metastatic disease, less than 10 percent.
“CMS believes that paying more for screening
services to detect and treat health problems early will improve the
quality of life for Medicare beneficiaries while saving money for both
the beneficiaries and taxpayers,” said Ms. Norwalk.
The Medicare law includes a statutory formula that
will require CMS to implement a minus 5.0 percent update in payment
rates for physician-related services. This is slightly less than the
5.1 percent reduction in the proposed rule.
This formula compares the actual rate of growth in
spending to a target rate, which is based on such factors as the growth
in number of Medicare fee-for-service beneficiaries and statutory or
regulatory changes in benefits. If the actual rate of spending growth
exceeds the target rate, the update is decreased; if it is less, the
update is increased.
Every year beginning with 2002, in response to
rising spending, the statutory update formula would have operated to
impose payment cuts. The negative update went into effect in 2002, but
for 2003 to 2006, Congress intervened and temporarily suspended the
requirements of the formula in favor of specific, statutory updates.
CMS is working with physician organizations, the
AQA Alliance, the National Quality Forum, and others to develop quality
measures, in order to identify and support higher-quality care.
Earlier this month, CMS posted on its website a
pool of potential quality measures for physicians to report as part of
the Physician Voluntary Reporting Program. More information about this
program, including the potential measures can be found at:
www.cms.hhs.gov/PVRP.
In order to promote best practices in cancer
treatment, CMS in 2005 and 2006 conducted a pay for reporting
demonstration for oncology services. An extension of this oncology
demonstration remains under consideration.
The final rule adopts a new methodology for
determining practice expense (such as office overhead) RVUs, as in the
proposed rule, but will phase in the changes over a four year period.
This methodology will be more transparent than the existing methodology,
allowing specialties and other stakeholders to predict the effects of
proposals to improve accuracy of practice expense payments.
This rule also codifies in regulation a DRA
provision that adds diabetes outpatient self-management training and
medical nutrition therapy services to the list of covered and separately
payable services included in the Federally Qualified Health Center
benefit, making these services more available to beneficiaries in
underserved areas, whether rural or urban.
Consistent with requirements of the DRA, the final
rule caps payment rates for imaging services under the physician fee
schedule at the amount paid for the same services when performed in
hospital outpatient departments. The final rule includes a list of
codes to which the outpatient prospective payment system (OPPS) cap
would apply. The rule also finalizes a policy of reducing by 25 percent
the payment for the technical component of multiple imaging procedures
on contiguous body parts. CMS will apply the multiple imaging
reductions first, followed by the OPPS imaging cap, if applicable.
The final rule also includes further guidance on
how drug manufacturers should address particular issues related to their
reporting requirements. In 2005, as required by the Medicare
Modernization Act, CMS implemented a new method of paying for Part B
drugs, such as those administered by a physician in the office. This
new methodology is based on the manufacturer’s average sales price
(ASP), plus six percent. The rule finalizes manufacturer reporting
requirements and addresses a number of technical ASP issues such as the
treatment of bona fide service fees in the context of the ASP
calculation and the definition of nominal sales.
Additional provisions in the final rule include:
● Amending the public consultation process for
developing payment amounts for new clinical laboratory tests.
● Adopting supplier standards for independent
diagnostic testing facilities (IDTFs).
● continuing the temporary intravenous immune
globulin preadministration-related services fee into 2007.
The final rule does not finalize the proposals to
(1) amend the reassignment regulations to clarify that any reassignment
pursuant to the contractual arrangement exception is subject to program
integrity safeguards that relate to the right to payment for diagnostic
tests; and
(2) amend the physician self-referral regulations to place restrictions
on what types of space ownership or leasing arrangements will qualify
for purposes of the in-office ancillary services exception or the
physician services exception to the physician self-referral
prohibition.
CMS says it will issue final regulations on these
proposals at a later time after further consideration.
“CMS remains committed to addressing arrangements
that may encourage over utilization of diagnostic services,” said Ms.
Norwalk. “However, we want to be careful that we do not interfere with
legitimate group practice arrangements that enable Medicare
beneficiaries to receive medical services at one location.”
Also included in the MPFS final rule are final
regulations affecting ambulance payment policy under the ambulance fee
schedule. This final rule will improve the accuracy of payments for
ambulance services and incorporate changes in geographic adjustments
based on the most recent census data.
The final rule announces an Ambulance Inflation
Factor (AIF) for CY 2007 of 4.3 percent. In addition, the final rule
further clarifies the definition of the types of facilities that can be
included as origin and destination points for "interfacility" transport
for Specialty Care Transport purposes. It also clarifies that ongoing
patient care services performed by a health care professional will be
included in the services that can be paid at a Specialty Care Transport
level.
The final rule will go on display at the Federal
Register today at 5:00 p.m. and will be published at a later date. The
rule will be effective for services on or after January 1, 2007. The
rule can be found at
http://www.cms.hhs.gov/center/hospital.asp.
For further information, please see fact sheets on
Preventive Services, Physician Participation, and Imaging Services at
www.cms.hhs.gov/apps/media/?media=facts.
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