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CCH® BENEFITS — 11/12/09

Medicare Payment Rates To Physicians Scheduled To Drop By 21.2% In Calendar Year 2010

from Spencer’s Benefits Reports: The Centers for Medicare and Medicaid Services (CMS) released summaries of 2010 Medicare payment and policy changes that include a 21.2% reduction in the conversion factor for physician services provided on or after Jan. 1, 2010, rather than the 21.5% reduction projected in previous proposed regulations. The changes are scheduled to be published as final regulations later in November for services provided in calendar year 2010 by physicians, outpatient hospital departments, and ambulatory surgical centers.

Physician Services

The law requires the CMS to adjust the Medicare physician fee schedule payment rates annually based on an update formula, which requires application of the sustainable growth rate that was adopted in the Balanced Budget Act of 1997.

This formula has led to rate reductions every year since 2002, although the CMS took administrative steps to avert a reduction in 2003, and Congress acted to prevent reductions in 2004 to2009. In response to the 21.2% decrease for 2010, Rep. John Dingell (Mich.) introduced H.R. 3961, the Medicare Physician Payment Reform Act, on October 29. According to a press release from Mr. Dingell’s office, this bill “will repeal a 21% fee reduction scheduled for January 2010 and replace the physician payment formula with a more stable system that ends the unrealistic cycle of threats of ever-larger fee cuts followed by short-term patches.”

For calendar year 2010, the CMS is also adopting the following changes:

• Refinements to improve payment rates for primary care services relative to other services.
• Increases in payment for the initial preventive physical exam (IPPE), also called the “Welcome to Medicare” visit, to be more in line with payment rates for more complex services. The IPPE benefit pays for an initial assessment of key elements of a beneficiary’s health within one year of the beneficiary’s enrollment in Medicare Part B.
• Increases in the Medicare share of payments for outpatient mental health services to 55% from 50%, beginning a gradual transition to bring payment parity for mental health and medical services furnished to Medicare beneficiaries.
• Implementation of a requirement that, beginning Jan. 1, 2012, suppliers of the technical component of advanced imaging services be accredited. The accreditation requirement will apply to mobile units, physicians’ offices, and independent diagnostic testing facilities that create the images, but will not apply to the physician who interprets them. The CMS will address suppliers’ accountability, business integrity, physician and technician training, service quality, and performance management through additional guidance.
• Steps to promote improvement in quality of care and patient outcomes, and to revise the electronic prescribing incentive program (e-prescribing program) and the physician quality reporting initiative. Eligible professionals or group practices that meet the requirements of each program in calendar year 2010 will be eligible for incentive payments for each program equal to 2.0% of their total estimated allowed charges for the reporting periods.

Taking all of the changes in the final regulations into account, the CMS projects that payments to general practitioners, family physicians, internists, and geriatric specialists will increase by between 5% and 8%, prior to application of the negative update required by the sustainable growth rate.

The physician payment final regulations are scheduled to appear in the November 25 Federal Register.

Hospital Outpatient Services, Ambulatory Surgical Centers

For hospital outpatient services, most hospitals will receive an inflation update of 2.1%, but hospitals that did not participate in quality data reporting for outpatient services or did not report the quality data successfully will receive only a 0.1% update in their payment rates. Ambulatory surgical centers (ASCs) will receive a 1.2% inflation update.

The CMS projects that the aggregate Medicare payments in calendar year 2010 will be approximately $32.2 billion to more than 4,000 hospitals and community mental health centers and approximately $3.4 billion to some 5,000 ASCs. The final regulations covering these services are scheduled to appear in the November 20 Federal Register.

The CMS will accept comments on designated provisions of the two sets of final regulations until December 29, and will respond to all comments at a later date. Unless otherwise specified, the new payment rates and policies will apply to services furnished to Medicare beneficiaries on or after Jan. 1, 2010.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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